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Free Market Access For Ldcs Under The Eba Initiative. An Empirical Analysis Using The Gravity Approach

Author

Listed:
  • Francesco Aiello

    ()

  • Paola Cardamone

    () (Dipartimento di Economia e Statistica, Università della Calabria)

Abstract

This paper assesses the effectiveness of the Everything But Arms (EBA) initiative launched by the EU in 2001. It evaluates whether EBA was effective in increasing the exports from LDCs to the EU over the period 1995-2006. After arguing that the impact of trade preferences should be estimated by using disaggregated trade flows rather than aggregated trade, the analysis is carried out by considering five products (cloves, coffee, crustaceans, molluscs and vanilla beans) which meet three selecting criteria related to the export intensity of EBA countries, to the real/actual preferences of EBA and to the intra-year distribution of EU tariffs. Furthermore, the exports share of the 5-selected goods with respect to national exports is never marginal and, in many cases, is higher than 60%. From an econometric perspective, we improve the reliability of results by giving more attention to the econometric setting and to measurement of the preferential treatment. The evidence is mixed and while this limits the possibility to draw a general conclusion about the role of EBA, it supports the decision to work using disaggregated data because the evidence provided allows us to gauge the sector specificities which would be hidden when analysing total trade. Results show a positive impact on the exports of crustaceans and vanilla of the preferential treatment granted by the EU under EBA, whereas the evidence is un-conclusive when considering the other three products.

Suggested Citation

  • Francesco Aiello & Paola Cardamone, 2010. "Free Market Access For Ldcs Under The Eba Initiative. An Empirical Analysis Using The Gravity Approach," Working Papers 201008, Università della Calabria, Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF.
  • Handle: RePEc:clb:wpaper:201008
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    File URL: http://www.ecostat.unical.it/RePEc/WorkingPapers/WP08_2010.pdf
    File Function: First version, 2010-04
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    More about this item

    Keywords

    Trade preferences; EBA initiative; gravity model; Panel data;

    JEL classification:

    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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