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Dissecting the trade effects of Europe's economic integration agreements

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  • Sophie Soete
  • Jan Van Hove

Abstract

This paper is the first to systematically study the trade effects of economic integration agreements (EIAs) between the European Union - one of the driving forces behind the recent explosion of EIAs - and third countries. We thoroughly disentangle the ex post effects of these EIAs: 1) we allow for differential timing of effects of EIAs, 2) we look at the effects on total trade flows as well as on the margins, 3) we allow for heterogeneity across EIAs and 4) we estimate the effects of EIAs on trade flows for each EU country individually. We use a panel on aggregate imports and exports for the period of 1988-2013 and control for endogeneity of EIAs and multilateral resistance. We find that EIAs have complex and heterogeneous effects on trade flows between the EU and the rest of the world. EIAs have differential effects on trade, depending on the characteristics of the EIAs and the EU member state. We also find that EIAs have positive effects on EU exports, but less on imports, and that a zero effect on the total trade flows sometimes covers opposing effects on the intensive and extensive margins.

Suggested Citation

  • Sophie Soete & Jan Van Hove, 2015. "Dissecting the trade effects of Europe's economic integration agreements," Working Papers of Department of Economics, Leuven 491784, KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven.
    • Handle: RePEc:ete:ceswps:491784
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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. 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).
    3. 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.
    4. 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).
    5. 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.
    6. 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.
    7. 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.
    8. 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.
    9. 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.
    10. 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.
    11. 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.

    More about this item

    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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