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The Contribution of Productivity Linkages to the General Equilibrium Analysis of Free Trade Agreements


  • Itakura, Ken
  • Hertel, Thomas
  • Jeff Reimer


Applied general equilibrium (AGE) analysis is often found to under-predict the increases in trade and economic growth that result from trade liberalization. One potential reason is that conventional AGE models ignore the strong correlations that exist between firm productivity, on the one hand, and exporting, importing, and investment, on the other. To examine this possibility, this study incorporates econometric evidence of these linkages into the dynamic Global Trade Analysis Project AGE model, and then uses this model to analyze a recently proposed East Asian free trade agreement. While conventional AGE modeling effects are found to predominate and be reinforced by the productivity effects, in some cases the latter actually reverse the changes predicted by the conventional effects.

Suggested Citation

  • Itakura, Ken & Hertel, Thomas & Jeff Reimer, 2003. "The Contribution of Productivity Linkages to the General Equilibrium Analysis of Free Trade Agreements," GTAP Working Papers 1193, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
  • Handle: RePEc:gta:workpp:1193
    Note: GTAP Working Paper No. 23

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    Cited by:

    1. Nadia Belhaj Hassine & Veronique Robichaud & Bernard Decaluwé, 2010. "Agricultural Trade Liberalization, Productivity Gain and Poverty Alleviation: A General Equilibrium Analysis," Working Papers 519, Economic Research Forum, revised 05 Jan 2010.
    2. Kawasaki, Kenichi, 2015. "The relative significance of EPAs in Asia-Pacific," Journal of Asian Economics, Elsevier, vol. 39(C), pages 19-30.
    3. Hertel, Thomas W., 2006. "A Survey of Findings on the Poverty Impacts of Agricultural Trade Liberalization," eJADE: electronic Journal of Agricultural and Development Economics, Food and Agriculture Organization, Agricultural and Development Economics Division, vol. 3(1).
    4. KAWASAKI Kenichi, 2010. "The Macro and Sectoral Significance of an FTAAP," ESRI Discussion paper series 244, Economic and Social Research Institute (ESRI).
    5. Thomas W. Hertel & L. Alan Winters, 2006. "Poverty and the WTO : Impacts of the Doha Development Agenda," World Bank Publications, The World Bank, number 7411.
    6. KAWASAKI Kenichi, 2014. "The Relative Significance of EPAs in Asia-Pacific," Discussion papers 14009, Research Institute of Economy, Trade and Industry (RIETI).
    7. Arashiro, Zuleika & Goldbaum, Sergio & Lima, Maria Lúcia Labate Mantovanini Pádua & Lima, Ieda Miyuki Koshi Dias De & Pedrossian Neto, Pedro, 2005. "Regional trade agreements and the world trade organization," Textos para discussão 146, FGV/EESP - Escola de Economia de São Paulo, Getulio Vargas Foundation (Brazil).
    8. Anderson, Kym & Martin, Will & van der Mensbrugghe, Dominique, 2005. "Global impacts of Doha trade reform scenarios on poverty," Policy Research Working Paper Series 3735, The World Bank.

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