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What Is The Cause Of Growth In Regional Trade: Trade Liberalization Or Rta'S? The Case Of Agriculture

Author

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  • Diao, Xinshen
  • Roe, Terry L.
  • Somwaru, Agapi

Abstract

This paper delves into the debate on the proliferation of regional trade arrangements by focusing on bilateral agricultural trade data over the 1962-1995 period for countries that currently are members of NAFTA, Mercosur, the EU and APEC. Agricultural is chosen because it has historically been protected by developed and dis-protected by developing nations, while in the case of the EU, its Common Agricultural Policy was the major policy jointly managed and funded by member countries. We suggest that the literature has tended to focus on factors explaining the level of trade, and neglected factors affecting growth in trade. While neighborhood characteristics affect neighborhood trade, they also appear to affect the policy regimes of neighboring countries. The shift to more outward oriented regimes is thus likely to induce a dynamic in trade among neighboring countries requiring several years to stabilize. As neighborhood trade grows, it is natural to form trade arrangements so as to harmonize policies and to remove other barriers. If this is the case, then we should expect the growth in intra regional trade to exceed growth in extra-regional trade, and these patterns should occur before the formation of regional trade arrangements. Our results support this explanation.

Suggested Citation

  • Diao, Xinshen & Roe, Terry L. & Somwaru, Agapi, 1999. "What Is The Cause Of Growth In Regional Trade: Trade Liberalization Or Rta'S? The Case Of Agriculture," Working Papers 14605, International Agricultural Trade Research Consortium.
  • Handle: RePEc:ags:iatrwp:14605
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    Citations

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    Cited by:

    1. Shane, Mathew & Roe, Terry L. & Somwaru, Agapi, 2008. "Exchange Rates, Foreign Income, and U.S. Agricultural Exports," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 37(2), October.
    2. Doan, Darcie & Goldstein, Andrew & Zahniser, Steven & Vollrath, Thomas L. & Bolling, H. Christine, 2004. "North American Integration In Agriculture: A Survey Paper," North American Agrifood Integration: Situation and Perspectives, May 2004, Cancun, Mexico 16730, Farm Foundation.
    3. Tegebu, Fredu Nega & Hussein, Edris Seid, 2015. "Effects of regional trade agreements on trade in strategic," 2015 Conference, August 9-14, 2015, Milan, Italy 212634, International Association of Agricultural Economists.
    4. Roe, Terry L. & Shane, Mathew & Somwaru, Agapi, 2006. "Exchange Rates, Foreign Income and U.S. Agriculture," Bulletins 12975, University of Minnesota, Economic Development Center.
    5. Raú l Serrano & Vicente Pinilla, 2012. "The long-run decline in the share of agricultural and food products in international trade: a gravity equation approach to its causes," Applied Economics, Taylor & Francis Journals, vol. 44(32), pages 4199-4210, November.
    6. repec:ibn:ijefaa:v:9:y:2017:i:8:p:88-102 is not listed on IDEAS
    7. Francis Tuan & Agapi Somwaru & Sun Ling Wang & Efthimia Tsakiridou, 2016. "The Dynamics of China's Export Growth: An Intertemporal Analysis," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 14(1), pages 37-57.
    8. Sampath Jayasinghe & Rakhal Sarker, 2004. "Effects of Regional Trade Agreements on Trade in Agrifood Products: Evidence from Gravity Modeling Using Disaggregated Data," Food and Agricultural Policy Research Institute (FAPRI) Publications 04-wp374, Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University.
    9. Sampath Jayasinghe & Rakhal Sarker, 2004. "Effects of Regional Trade Agreements on Trade in Agrifood Products: Evidence from Gravity Modeling Using Disaggregated Data," Center for Agricultural and Rural Development (CARD) Publications 04-wp374, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    10. Colyer, Dale, 2001. "Impacts Of Nafta On U.S.-Mexico Agricultural Trade," Conference Papers 19105, West Virginia University, Department of Agricultural Resource Economics.

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