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Deep Integration: Free trade agreements heterogeneity and its impact on bilateral trade

Author

Listed:
  • Jaime Ahcar

    (LEDa - Laboratoire d'Economie de Dauphine - Université Paris-Dauphine)

  • Jean-Marc Siroën

    (LEDa - Laboratoire d'Economie de Dauphine - Université Paris-Dauphine)

Abstract

Regional trade agreements (RTAs) have surgedin a context of stalled multilateral trade negotiations. Their impact on international trade and on development 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 the World Trade Organization (WTO) and the World Trade Institute (WTI), and then we test their significance in a gravity model for International Trade.Treating additive indicators as factor variables, as well as our innovative use of Multiple Correspondence Analysis MCA to get distilled indicators of deep integration allowed us to givenew insight and to confirm recent findings on the field of deep integration.We find that deeper agreements increase trade more than shallow ones, whereas the provisions they include are within or outside of the WTO domain. Therefore, if we accept the hypothesis that trade liberalization contribute to a better allocation of resources, then trade policy makers should favour deeper RTAs to enhance economic development.

Suggested Citation

  • Jaime Ahcar & Jean-Marc Siroën, 2015. "Deep Integration: Free trade agreements heterogeneity and its impact on bilateral trade," Post-Print hal-01485694, HAL.
  • Handle: RePEc:hal:journl:hal-01485694
    Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-01485694
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    References listed on IDEAS

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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, April.
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    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.
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    More about this item

    Keywords

    Deep integration; gravity model; regional trade agreements; trade liberalization; international trade; economic development;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations
    • F55 - International Economics - - International Relations, National Security, and International Political Economy - - - International Institutional Arrangements

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