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Trade Creation, Diversion Effects and Exchange Rate Volatility in the Global Meat Trade

Author

Listed:
  • Karemera, David

    (South Carolina State University)

  • Koo, Won

    (North Dakota State University)

  • Smalls, Gerald

    (School of Business, Benedict College)

  • Whiteside, Louis

    (South Carolina State University)

Abstract

A modified gravity model is specified and applied to meat trade markets to identify factors affecting bovine and swine meat trade flows. The model is used to evaluate the effects of bilateral and regional free trade agreements. This study reveals that gravity models can be effectively parameterized and used in single commodity trade studies. Using data from 1986 to 2009, the results show that income, population, production capacity, distance, and exchange rate volatility are major factors affecting meat trade. The findings also demonstrate that the formation of the North American Free Trade Agreement and European Union significantly enhanced bovine and swine meat trade flows through trade creation among members and trade diversion from non-members to members. The Common Market of the South led to trade creation with inconclusive results for trade diversion while the Association of South-East Asian Nations led to trade diversion with no evidence of increased intra-bloc trade. The hoof-and-mouth disease significantly impaired bovine meat trade flows.

Suggested Citation

  • Karemera, David & Koo, Won & Smalls, Gerald & Whiteside, Louis, 2015. "Trade Creation, Diversion Effects and Exchange Rate Volatility in the Global Meat Trade," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 30(2), pages 240-268.
    • Handle: RePEc:ris:integr:0658
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    Citations

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    Cited by:

    1. Pablo Delgado & Vicente Pinilla & Ignacio Belloc, 2023. "From net importer to global leader: understanding the drivers of Spain's meat export growth since the 1960s," Documentos de Trabajo (DT-AEHE) 2307, Asociación Española de Historia Económica.
    2. Karemera, David & Guah, Mathew & Smalls, Gerald & Whitesides, Louis, 2023. "A Re-Examination of the Benefits of Trade Agreements on Agricultural Exports and the Impact of the 2008 Great Recession," International Journal of Food and Agricultural Economics (IJFAEC), Alanya Alaaddin Keykubat University, Department of Economics and Finance, vol. 11(3), July.
    3. Karemera, David & N’Dede, Cynthia & Smalls, Gerald Hubbard & Whitesides, Louis, 2021. "Assessing Trade Benefits of A Ttip and the Role of Regional Trade Free Blocks on South Carolina Agricultural Exports: A Static and Dynamic Gravity Model Approach," International Journal of Food and Agricultural Economics (IJFAEC), Alanya Alaaddin Keykubat University, Department of Economics and Finance, vol. 9(4), October.
    4. Marcin Pigłowski, 2021. "The Intra-European Union Food Trade with the Relation to the Notifications in the Rapid Alert System for Food and Feed," IJERPH, MDPI, vol. 18(4), pages 1-19, February.
    5. Salahuddin & Javed Iqbal & Misbah Nosheen, 2020. "Economic & Cultural Distance & Regional Integration: Evidence from Gravity Model Using Disaggregated Data for Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 59(2), pages 243-274.

    More about this item

    Keywords

    Regional Free Trade Agreements; Trade Creation and Diversion; Exchange Rate Volatility; Bovine and Swine Meats; NAFTA; EU; ASEAN; MERCOSUR;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration
    • F19 - International Economics - - Trade - - - Other

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