IDEAS home Printed from https://ideas.repec.org/p/ris/drxlwp/2013_003.html
   My bibliography  Save this paper

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
    as

    Download full text from publisher

    File URL: https://drive.google.com/file/d/0BxRDnd8cEKndYUthNjJ5MTQxYjQ/view?usp=share_link&resourcekey=0-83weUEOXwSxsd1ybMhWXXQ
    File Function: Full text
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Anderson, James E. & Yotov, Yoto V., 2016. "Terms of trade and global efficiency effects of free trade agreements, 1990–2002," Journal of International Economics, Elsevier, vol. 99(C), pages 279-298.
    2. Trefler, Daniel, 1993. "Trade Liberalization and the Theory of Endogenous Protection: An Econometric Study of U.S. Import Policy," Journal of Political Economy, University of Chicago Press, vol. 101(1), pages 138-160, February.
    3. Magee Christopher S, 2003. "Endogenous Preferential Trade Agreements: An Empirical Analysis," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 2(1), pages 1-19, December.
    4. 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.
    5. Baier, Scott L. & Bergstrand, Jeffrey H., 2004. "Economic determinants of free trade agreements," Journal of International Economics, Elsevier, vol. 64(1), pages 29-63, October.
    6. James E. Anderson, 2011. "The Gravity Model," Annual Review of Economics, Annual Reviews, vol. 3(1), pages 133-160, September.
    7. Baier, Scott L. & Bergstrand, Jeffrey H., 2007. "Do free trade agreements actually increase members' international trade?," Journal of International Economics, Elsevier, vol. 71(1), pages 72-95, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dai, Mian & Yotov, Yoto V. & Zylkin, Thomas, 2014. "On the trade-diversion effects of free trade agreements," Economics Letters, Elsevier, vol. 122(2), pages 321-325.
    2. Zylkin, Thomas, 2014. "Not all Free Trade Agreements have the same Advantages," School of Economics Working Paper Series 2014-9, LeBow College of Business, Drexel University.
    3. Scott L. Baier & Amanda Kerr & Yoto V. Yotov, 2018. "Gravity, distance, and international trade," Chapters, in: Bruce A. Blonigen & Wesley W. Wilson (ed.), Handbook of International Trade and Transportation, chapter 2, pages 15-78, Edward Elgar Publishing.
    4. Benedikt Heid & Mario Larch & Yoto V. Yotov, 2021. "Estimating the effects of non‐discriminatory trade policies within structural gravity models," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 54(1), pages 376-409, February.
    5. María Pía Olivero & Yoto V. Yotov, 2012. "Dynamic gravity: endogenous country size and asset accumulation," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 45(1), pages 64-92, February.
    6. Mario Larch & Yoto Yotov, 2017. "On the impact of TTIP in Southeastern and Eastern Europe: A quantitative analysis," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 3, pages 54-73,74-92.
    7. Shadat Hossain, 2018. "SAFTA and AFTA: a comparative welfare analysis of two regional trade agreements," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 7(1), pages 1-27, December.
    8. Baier, Scott L. & Bergstrand, Jeffrey H. & Feng, Michael, 2014. "Economic integration agreements and the margins of international trade," Journal of International Economics, Elsevier, vol. 93(2), pages 339-350.
    9. Anderson, James E. & Yotov, Yoto V., 2016. "Terms of trade and global efficiency effects of free trade agreements, 1990–2002," Journal of International Economics, Elsevier, vol. 99(C), pages 279-298.
    10. Baier, Scott L. & Bergstrand, Jeffrey H. & Clance, Matthew W., 2018. "Heterogeneous effects of economic integration agreements," Journal of Development Economics, Elsevier, vol. 135(C), pages 587-608.
    11. Piermartini, Roberta & Yotov, Yoto V., 2016. "Estimating trade policy effects with structural gravity," WTO Staff Working Papers ERSD-2016-10, World Trade Organization (WTO), Economic Research and Statistics Division.
    12. Claudio Candia Campano & Medardo Aguirre González & Lilliam Antón López & Javier Beltrán Valdebenito, 2018. "A gravity model of trade for Nicaraguan agricultural exports," Revista Cuadernos de Economía, Universidad Nacional de Colombia -FCE - CID, vol. 37(74), pages 391-428, July.
    13. Campi, Mercedes & Dueñas, Marco, 2019. "Intellectual property rights, trade agreements, and international trade," Research Policy, Elsevier, vol. 48(3), pages 531-545.
    14. Martin Clever & Inmaculada Martínez-Zarzoso, 2010. "Deeper Integration: What Effects On Trade," Ibero America Institute for Econ. Research (IAI) Discussion Papers 204, Ibero-America Institute for Economic Research.
    15. Heid, Benedikt & Larch, Mario, 2016. "Gravity with unemployment," Journal of International Economics, Elsevier, vol. 101(C), pages 70-85.
    16. Claudio Candia Campano & Medardo Aguirre González & Lilliam Antón López & Javier Beltrán Valdebenito, 2018. "A gravity model of trade for Nicaraguan agricultural exports," Revista Cuadernos de Economía, Universidad Nacional de Colombia -FCE - CID, vol. 37(74), pages 391-428, July.
    17. Zongo, Amara, 2021. "The impact of services trade restrictiveness on food trade," International Economics, Elsevier, vol. 166(C), pages 71-94.
    18. Clougherty, Joseph A. & Grajek, Michał, 2014. "International standards and international trade: Empirical evidence from ISO 9000 diffusion," International Journal of Industrial Organization, Elsevier, vol. 36(C), pages 70-82.
    19. Axel Berger & Matthias Busse & Peter Nunnenkamp & Martin Roy, 2013. "Do trade and investment agreements lead to more FDI? Accounting for key provisions inside the black box," International Economics and Economic Policy, Springer, vol. 10(2), pages 247-275, June.
    20. Gabriel Felbermayr & Mario Larch & Mario Larch, 2014. "Transatlantic Free Trade: Questions and Answers from the Vantage Point of Trade Theory," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 14(04), pages 03-17, January.

    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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ris:drxlwp:2013_003. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/cbdreus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Richard C. Barnett (email available below). General contact details of provider: https://edirc.repec.org/data/cbdreus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.