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Dissecting the Trade Effects of Europe’s Economic Integration Agreements

Author

Listed:
  • Soete, Sophie

    (University of Leuven)

  • Van Hove, Jan

    (University of Leuven and KBC Group)

Abstract

This paper systematically studies the trade effects of Economic Integration Agreements involving the European Union. We thoroughly disentangle the ex post effects of these agreements by analyzing various sources of heterogeneity and controlling for potential endogeneity and multilateral resistance. Our results confirm the general trade-enhancing impact, but point to an asymmetric effect on European exports and imports. While free trade agreements strongly increase import competition in the European Union market, their effect on European exports is much more complex. Economic Integration Agreements enhance trade by more product differentiation (the extensive margin), but reduce the trade intensity (the intensive margin) simultaneously. Nevertheless, the cumulative effect over time is positive for imports, as well as exports. Moreover, the trade effects differ across European Union member states and across agreements. In particular, the integration depth and the economic rationale matter.

Suggested Citation

  • Soete, Sophie & Van Hove, Jan, 2017. "Dissecting the Trade Effects of Europe’s Economic Integration Agreements," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 32(1), pages 193-243.
    • Handle: RePEc:ris:integr:0711
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    Cited by:

    1. Zuzanna Studnicka & Wouter Thierie & Jan Van Hove, 2019. "The impact of regional trade agreements on European exports," International Economics and Economic Policy, Springer, vol. 16(3), pages 467-488, July.
    2. Ehigiamusoe, Kizito Uyi & Lean, Hooi Hooi, 2019. "Do economic and financial integration stimulate economic growth? A critical survey," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 13, pages 1-27.
    3. Nivedita Mullick & Areej A. Siddiqui, 2021. "Economic Integration Agreements and Extensive Margin of Export: An Empirical Study of India," Working Papers 2155, Indian Institute of Foreign Trade.
    4. Duc Bao Nguyen & Anne‐Gaël Vaubourg, 2021. "Financial intermediation, trade agreements and international trade," The World Economy, Wiley Blackwell, vol. 44(3), pages 788-817, March.
    5. Luis Marcelo Florensa & Laura Márquez-Ramos & María Luisa Recalde & María Victoria Barone, 2014. "Does economic integration increase trade margins? Empirical evidence from LAIAs countries," Working Papers 2014/05, Economics Department, Universitat Jaume I, Castellón (Spain).
    6. Ederington, Josh & Paraschiv, Mihai & Zanardi, Maurizio, 2022. "The short and long-run effects of international environmental agreements on trade," Journal of International Economics, Elsevier, vol. 139(C).
    7. Nenubari Ikue John & Ifeanyichukwu Lucky Amabuike & Joseph Ade Ajaba & John Akin Sodipo & Linus Bamekpari Enegesi, 2020. "Financial system, trade concentration and economic growth in West African Monetary Zone (WAMZ)," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 9(4), pages 426-436, July.
    8. Luis Florensa & Laura Márquez-Ramos & María Recalde, 2015. "The effect of economic integration and institutional quality of trade agreements on trade margins: evidence for Latin America," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 151(2), pages 329-351, May.
    9. Márquez-Ramos , Laura, 2016. "Regionalism, subnational variation and gravity: A four-country tale," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 35, pages 7-36.
    10. Vlatka Bilas, 2018. "World Trade Organization and regional economic integrations: together in future or not?," International Studies, Libertas International University, vol. 18(1-2), pages 49-64.
    11. Rasoulinezhad, Ehsan, 2020. "Energy Trade and Economic Integration between the Commonwealth Independent States and China," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 35(1), pages 172-190.

    More about this item

    Keywords

    Trade Agreements; European Union; Gravity Model; Panel Data; Margins of Trade;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration

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