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On the Trade-diversion Effects of Free Trade Agreements

Author

Listed:
  • Dai, Mian

    (Drexel University)

  • Yotov, Yoto

    (Drexel University)

  • Zylkin, Thomas

    (Drexel University)

Abstract

Standard trade theory suggests that Free Trade Agreements (FTAs) could disrupt trade between members and non-members. However, the trade diversion effects of FTAs have not been thoroughly examined empirically. Using a novel empirical approach, we confirm that FTAs that entered into force during the 1990s diverted trade away from non-member countries. Interestingly, we find that diversion from internal trade due to FTAs was significantly stronger than diversion from external trade.

Suggested Citation

  • Dai, Mian & Yotov, Yoto & Zylkin, Thomas, 2013. "On the Trade-diversion Effects of Free Trade Agreements," School of Economics Working Paper Series 2013-3, LeBow College of Business, Drexel University, revised 15 Sep 2014.
    • Handle: RePEc:ris:drxlwp:2013_003
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    References listed on IDEAS

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    More about this item

    Keywords

    International Trade; Gravity; Free Trade Agreements; Trade Diversion;
    All these keywords.

    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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