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Deep integration: free trade agreements heterogeneity and its impact on bilateral trade

Listed author(s):
  • Jaime Rafael Ahcar


    (PSL, Université Paris-Dauphine,LEDa, IRD UMR DIAL, 75016 Paris, France)

  • Jean-Marc Siroën


    (PSL, Université Paris-Dauphine,LEDa, IRD UMR DIAL, 75016 Paris, France)

Regional trade agreements (RTAs) have surged in a context of stalled multilateral trade negotiations. Their impact on trade have been well documented while scant attention have been paid to empirical studies exploring their heterogeneity in the scope of deep integration. We intend in this paper to determine if deeper RTAs promote trade more effectively than less ambitious agreements. We proceed to generate credible indicators of deep integration exploiting two recently available data sets from WTO and WTI-DESTA, and then we test their significance in a gravity model for International Trade. We find that deeper agreements with provisions inside or outside WTO’s domains increase trade more than shallow ones. Treating additive indicators as factor variables, as well as our innovative use of Multiple Correspondence Analysis MCA to get distilled indicators of deep integration allow us to give a new insight on this phenomenon and to confirm recent findings on the field of deep integration. _________________________________ Les accords commerciaux régionaux (ACR) ont proliféré alors même que les négociations multilatérales ne parvenaient pas à progresser. Leur impact sur le commerce a été bien documenté mais peu d’attention a été portée aux études empiriques qui exploraient l’hétérogénéité d’accords plus ou moins “profonds”. Le but de cet article est de déterminer si des ACR plus profonds promeuvent le commerce plus efficacement que les accords moins ambitieux. Nous commençons par créer des indicateurs pertinents d’intégration profonde à partir de deux bases de données récentes construites par l’OMC et par WTI-DESTA. Puis nous testons leur signification dans un modèle de gravité. Nous trouvons ainsi que les accords plus profonds incluant des dispositions se situant dans ou hors les compétences de l’OMC, accroissent davantage le commerce que les accords superficiels. Nous utilisons des indicateurs additifs ainsi que des indicateurs construits à partir de l’analyse des correspondances multiples (ACM), afin d’obtenir des indicateurs synthétiques et confirmer les résultats obtenus récemment sur les effets de l’intégration profonde sur le commerce.

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Paper provided by DIAL (Développement, Institutions et Mondialisation) in its series Working Papers with number DT/2014/25.

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Length: 31 pages
Date of creation: Dec 2014
Handle: RePEc:dia:wpaper:dt201425
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  1. Eric Cahuzac & Christophe Bontemps, 2008. "Stata par la pratique : statistiques, graphiques et éléments de programmation," Stata Press books, StataCorp LP, number splp, January.
  2. Andrew K. Rose, 2004. "Do We Really Know That the WTO Increases Trade?," American Economic Review, American Economic Association, vol. 94(1), pages 98-114, March.
  3. Santos Silva, J.M.C. & Tenreyro, Silvana, 2011. "Further simulation evidence on the performance of the Poisson pseudo-maximum likelihood estimator," Economics Letters, Elsevier, vol. 112(2), pages 220-222, August.
  4. Baier, Scott L. & Bergstrand, Jeffrey H. & Feng, Michael, 2014. "Economic integration agreements and the margins of international trade," Journal of International Economics, Elsevier, vol. 93(2), pages 339-350.
  5. Vincent Vicard, 2009. "On trade creation and regional trade agreements: does depth matter?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 145(2), pages 167-187, July.
  6. J. M. C. Santos Silva & Silvana Tenreyro, 2006. "The Log of Gravity," The Review of Economics and Statistics, MIT Press, vol. 88(4), pages 641-658, November.
  7. Vicard, Vincent, 2011. "Determinants of successful regional trade agreements," Economics Letters, Elsevier, vol. 111(3), pages 188-190, June.
  8. Baier, Scott L. & Bergstrand, Jeffrey H., 2007. "Do free trade agreements actually increase members' international trade?," Journal of International Economics, Elsevier, vol. 71(1), pages 72-95, March.
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