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Do Hub-and-Spoke Free Trade Agreements Increase Trade? A Panel Data Analysis

Author

Listed:
  • Alba, Joseph

    (Nanyang Technological University)

  • Hur, Jung

    (Sogang University)

  • Park, Donghyun

    (Asian Development Bank)

Abstract

We use panel data consisting of 96 countries and covering the period 1960–2000 to investigate the effects of free trade agreements (FTAs) and hub-and-spoke systems of FTAs on exports. Our empirical results imply an annual growth rate of 5.57% in exports, leading to a doubling of exports after 12.4 years, between FTA partners. Non-overlapping FTAs account for 4.12%, while hub-and-spoke FTAs account for 1.45% of the estimated export growth rate. This indicates that in addition to the direct trade liberalizing effect of FTAs, the hub-and-spoke nature of FTAs has an additional positive effect on trade.

Suggested Citation

  • Alba, Joseph & Hur, Jung & Park, Donghyun, 2010. "Do Hub-and-Spoke Free Trade Agreements Increase Trade? A Panel Data Analysis," Working Papers on Regional Economic Integration 46, Asian Development Bank.
  • Handle: RePEc:ris:adbrei:0046
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    Citations

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    Cited by:

    1. Bob Milward, 2015. "On the Historical, Moral and Economic Arguments for Asymmetric Trading Regimes: the case of sub-Saharan Africa," World Economic Review, World Economics Association, vol. 2015(5), pages 1-87, July.
    2. George Deltas & Klaus Desmet & Giovanni Facchini, 2012. "Hub‐and‐spoke free trade areas: theory and evidence from Israel," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 45(3), pages 942-977, August.
    3. Yoshifumi Fukunaga, 2015. "ASEAN's Leadership in the Regional Comprehensive Economic Partnership," Asia and the Pacific Policy Studies, Wiley Blackwell, vol. 2(1), pages 103-115, January.
    4. Dmitriy Aleksandrovich Izotov, 2021. "Trade Integration in the Asia-Pacific Region: Decomposition of Effects," Spatial Economics=Prostranstvennaya Ekonomika, Economic Research Institute, Far Eastern Branch, Russian Academy of Sciences (Khabarovsk, Russia), issue 1, pages 66-96.
    5. Jinsoo Park, 2015. "Korea’s linkage strategy between FTA hub policy and middle power leadership in regional economic integration," Asia Europe Journal, Springer, vol. 13(4), pages 379-394, December.
    6. Juyoung Cheong & Do Won Kwak & Kam Ki Tang, 2015. "Can Trade Agreements Curtail Trade Creation and Prevent Trade Diversion?," Review of International Economics, Wiley Blackwell, vol. 23(2), pages 221-238, May.
    7. Tristan Kohl, 2014. "Do we really know that trade agreements increase trade?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 150(3), pages 443-469, August.
    8. Kazunobu Hayakawa & Nuttawut Laksanapanyakul & Taiyo Yoshimi, 2021. "Tariff scheme choice," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 157(2), pages 323-346, May.

    More about this item

    Keywords

    free trade agreement; hub and spoke; world bilateral trade data; panel data analysis; fixed effect; average treatment effect;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration

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