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The Impact of South-South Preferential Trade Agreements on Industrial Development: An Empirical Test

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  • Volpe Martincus, Christian

    (Inter-American Development Bank)

  • Siedschlag, Iulia

    (Economic and Social Research Institute, Dublin)

Abstract

Preferential trade agreements could lead to a reallocation of resources across sectors and countries. Production patterns resulting from North-North regional integration initiatives have been documented in several studies. However, empirical evidence on South-South trade agreements is limited. The purpose of this paper is to fill this gap in the empirical literature by looking at the effects of the establishment of MERCOSUR on manufacturing production patterns in Argentina, Brazil, and Uruguay over the period 1985-1998. We find that deepened preferential trade liberalization has fostered a reshaping of manufacturing production structures according to regional comparative advantage in labor and skilled labor. Furthermore, declining internal tariffs have weakened agglomeration forces determined by the distribution of market sizes. By using GMM estimation techniques, we ensure that these results are robust to endogeneity and serial correlation.

Suggested Citation

  • Volpe Martincus, Christian & Siedschlag, Iulia, 2010. "The Impact of South-South Preferential Trade Agreements on Industrial Development: An Empirical Test," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 25, pages 69-104.
    • Handle: RePEc:ris:integr:0497
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    Cited by:

    1. Fugazza, Marco & Robert-Nicoud, Frédéric, 2006. "Can South-South trade Liberalisation Stimulate North-South Trade ?," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 21, pages 234-253.
    2. Martín Leandro Dutto Giolongo & Emiliano A. Carlevaro & Juan Jullier & Marcos Narváez, 2020. "Board-related corporate governance practices and performance of Argentine banks," Asociación Argentina de Economía Política: Working Papers 4340, Asociación Argentina de Economía Política.
    3. Uexküll, Erik von., 2012. "Regional trade and employment in ECOWAS," ILO Working Papers 994687913402676, International Labour Organization.
    4. Germán González & Victoria Giordano, 2023. "Gravity Approach to the Impact of Crises on MERCOSUR Trade," Working Papers 280, Red Nacional de Investigadores en Economía (RedNIE).
    5. Iulia Traistaru-Siedschlag & Christian Martincus, 2006. "Economic Integration and Manufacturing Concentration Patterns: Evidence from MERCOSUR," Open Economies Review, Springer, vol. 17(3), pages 297-319, July.
    6. Kareem, Olayinka Idowu, 2011. "The Effects of the European Union.s and China.s Trade Agreements on Africa.s Exports," WIDER Working Paper Series 065, World Institute for Development Economic Research (UNU-WIDER).
    7. repec:ilo:ilowps:468791 is not listed on IDEAS
    8. Omar S. Dahi & Firat Demir, 2013. "Preferential trade agreements and manufactured goods exports: does it matter whom you PTA with?," Applied Economics, Taylor & Francis Journals, vol. 45(34), pages 4754-4772, December.
    9. Fernando Delbianco & Andrés Fioriti & Germán González, 2020. "Exploring the geographical bias of manufactured exports in MERCOSUR," Asociación Argentina de Economía Política: Working Papers 4339, Asociación Argentina de Economía Política.
    10. Ottaviano, Gianmarco I.P., 2005. "National Disparities and Regional Allocation of Resources: A Positive Framework," IDB Publications (Working Papers) 2922, Inter-American Development Bank.
    11. Alessia Lo Turco, 2005. "South-South Trade Agreements, Location of Production and Inequality in Latin America," Ibero America Institute for Econ. Research (IAI) Discussion Papers 127, Ibero-America Institute for Economic Research.

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    More about this item

    Keywords

    preferential trade liberalization; production patterns; MERCOSUR;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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