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Are Preferential Agreements Stepping Stones To Other Markets?

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Abstract

This paper investigates whether preferential trade agreements (PTA) promote exports to third nations through the expansion of the extensive margin (i.e. larger number of export goods). The analysis covers 11 South- South and South-North PTAs involving 36 countries that exported to 118 different destinations during the 5 years before and after the PTA. Using a conditional logit model, and trade data at the SITC 5-digit level, we estimate the effect of new within-PTA exports on the subsequent exports to thirdnation markets. The results suggest that PTAs have a positive indirect effect, i.e. spillover-effect, on exports to third countries. Previous export experience in a given product in the preferential area is shown to have a positive effect on the probability that the same product is subsequently exported to a nonmember market. The size of the effect, however, varies across PTAs.

Suggested Citation

  • Ana Cristina Molina, 2010. "Are Preferential Agreements Stepping Stones To Other Markets?," IHEID Working Papers 13-2010, Economics Section, The Graduate Institute of International Studies.
  • Handle: RePEc:gii:giihei:heidwp13-2010
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    File URL: http://repec.graduateinstitute.ch/pdfs/Working_papers/HEIDWP13-2010.pdf
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    References listed on IDEAS

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    1. Van Biesebroeck, Johannes, 2005. "Exporting raises productivity in sub-Saharan African manufacturing firms," Journal of International Economics, Elsevier, vol. 67(2), pages 373-391, December.
    2. De Loecker, Jan, 2007. "Do exports generate higher productivity? Evidence from Slovenia," Journal of International Economics, Elsevier, vol. 73(1), pages 69-98, September.
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    Cited by:

    1. Paul Brenton & Olivier Cadot & Martha Denisse Pierola, 2012. "Pathways to African Export Sustainability," World Bank Publications, The World Bank, number 9380, April.
    2. Céline CARRERE & Vanessa STRAUSS-KAHN, 2012. "Exports Dynamics: Raising Developing Countries Exports Survival through Experience," Working Papers P35-A, FERDI.
    3. Defever, Fabrice & Heid, Benedikt & Larch, Mario, 2015. "Spatial exporters," Journal of International Economics, Elsevier, vol. 95(1), pages 145-156.
    4. Albornoz, Facundo & Calvo Pardo, Héctor F. & Corcos, Gregory & Ornelas, Emanuel, 2012. "Sequential exporting," Journal of International Economics, Elsevier, vol. 88(1), pages 17-31.
    5. repec:ilo:ilowps:469183 is not listed on IDEAS
    6. Lili Wang & Yong Zhao, 2013. "Does Experience Facilitate Entry into New Export Destinations?," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 21(5), pages 36-59, September.
    7. Emanuel Ornelas, 2012. "Preferential Trade Agreements and the Labor Market," CEP Discussion Papers dp1117, Centre for Economic Performance, LSE.
    8. Céline CARRERE & Vanessa STRAUSS-KAHN, 2014. "Developing Countries Exports Survival in the OECD: Does Experience Matter?," Working Papers P100, FERDI.
    9. Céline Carrère & Vanessa Strauss-Kahn, 2017. "Export survival and the dynamics of experience," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 153(2), pages 271-300, May.

    More about this item

    Keywords

    Trade policy; spillovers; market entry;

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General

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