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Exploring the Effects of FTAs on Chilean Exports: Heterogenous responses and Financial Constraints

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  • Roberto Alvarez
  • Eugenia Andreassen

Abstract

In this paper, we examine the influence of Free Trade Agreements (FTAs) on Chilean exports during the past thirty years. Over the last three decades, Chile has entered into 31 FTAs with 65 countries, encompassing nearly 90% of global GDP. Despite this, there’s a notable absence of empirical evidence regarding the extent and nature of the impact of these agreements on export volumes and product diversification. With a rich dataset encompassing bilateral trade flows at the product-level and key financial indicators, we employ a difference-in-differences approach to provide robust evidence of the positive impact of these FTAs on export levels and the variety of products exported. Our analysis also reveals variations in these effects based on the industries’ initial export share and trading partners’ income levels. Furthermore, we investigate how FTAs interacted with the financial development and capital control policies of trading partners, demonstrating their role in mitigating financial constraints on trade.

Suggested Citation

  • Roberto Alvarez & Eugenia Andreassen, 2024. "Exploring the Effects of FTAs on Chilean Exports: Heterogenous responses and Financial Constraints," Estudios de Economia, University of Chile, Department of Economics, vol. 51(2), pages 299-323, December.
    • Handle: RePEc:udc:esteco:v:51:y:2024:i:2:p:299-323
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    File URL: https://estudiosdeeconomia.uchile.cl/index.php/EDE/article/view/76936/78606
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    JEL classification:

    • F1 - International Economics - - Trade
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F63 - International Economics - - Economic Impacts of Globalization - - - Economic Development

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