Evaluating the Trade Effect of Developing Regional Trade Agreements : A Semi-parametric Approach
Many recent papers have pointed to ambiguous trade effects of developing regional trade agreements (RTAs), calling for a reassessment of their economic merits. The author focuses on seven such agreements currently in force in Sub-Saharan Africa (EC...
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| Language: | English |
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World Bank, Washington, DC
2012
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| Online Access: | http://documents.worldbank.org/curated/en/2007/05/7558207/evaluating-trade-effect-developing-regional-trade-agreements-semi-parametric-approach http://hdl.handle.net/10986/7090 |
| Summary: | Many recent papers have pointed to
ambiguous trade effects of developing regional trade
agreements (RTAs), calling for a reassessment of their
economic merits. The author focuses on seven such agreements
currently in force in Sub-Saharan Africa (ECOWAS and SADC),
Asia (AFTA and SAPTA) and Latin America (CACM, CAN, and
MERCOSUR), estimating their impacts on their members'
trade flows. Instead of the usual dummy variables for RTAs,
he proposes a variable taking into account the number of
years of membership. He then combines a gravity model with
kernel estimation techniques to capture the non-monotonic
trade effects while imposing minimal structure on the model.
The results indicate that except for SAPTA, these RTAs have
had a positive impact on their members' intra-trade
over the estimation period (1960-99). AFTA seems to be the
most successful among them, with an estimated positive
impact on its members' imports from the rest of the
world (hence no trade diversion), but its impact on their
exports to the rest of the world is rather limited. During
its first 10 years of existence, ECOWAS appears to have had
a positive impact on its members' imports from the rest
of the world (hence no trade diversion), but this positive
impact vanished over time. SAPTA's negative impact on
its members' intra-trade is probably an implicit effect
of the India-Pakistan tensions over the estimation period. |
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