Does It Matter Who You Sign With? Comparing the Impacts of North-South and South-South Trade Agreements on Bilateral Trade
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Free trade agreements lead to a rise in
bilateral trade regardless of whether the signatories are
developed or developing countries. Furthermore, the
percentage increase in bilateral trade is higher for
South-South agreements than for North-South agreements. In
this paper, the results are robust across a number of
gravity model specifications in which the analysis controls
for the endogeneity of free trade agreements (with bilateral
fixed effects) and also takes account of multilateral
resistance in both estimation (with country-time fixed
effects) and comparative statics (analytically). The
analytical model shows that multilateral resistance dampens
the impact of free trade agreements on trade by less in
South-South agreements than in North-South agreements, which
accentuates the difference implied by the gravity model
coefficients, and that this difference gets larger as the
number of signatories rises. For example, allowing for lags
and multilateral resistance, a four-country North-South
agreement raises bilateral trade by 53 percent while the
analogous South-South impact is 107 percent.
Palabras clave
ABSOLUTE VALUE, AGGREGATE TRADE, AGRICULTURE, BARRIERS TO IMPORTS, BILATERAL TRADE, BLOC TRADE, BUSINESS ENVIRONMENT, CHANGES IN TRADE, COMMODITIES, COMMODITY, COMMON MARKET, COMPARATIVE ADVANTAGE, COMPETITION FRAMEWORK, COMPETITION POLICY, CONSUMERS, COST REDUCTIONS, COUNTRY DUMMIES, CURRENCY, CURRENCY UNION, CUSTOMS, CUSTOMS UNION, CUSTOMS UNIONS, DATE OF ENTRY INTO FORCE, DEVELOPED COUNTRIES, DEVELOPING COUNTRIES, DEVELOPING COUNTRY, DEVELOPMENT ECONOMICS, DEVELOPMENT POLICY, DEVELOPMENT STRATEGIES, ECONOMETRIC ANALYSIS, ECONOMIC GEOGRAPHY, ECONOMIC INTEGRATION, ECONOMIC REFORM, ECONOMIC RELATIONS, ECONOMIC SIZE, ECONOMIC THEORY, ECONOMICS RESEARCH, ECONOMIES OF SCALE, ELASTICITY, ELASTICITY OF SUBSTITUTION, EUROPEAN UNION, EXCHANGE RATE, EXCHANGE RATE REGIMES, EXCHANGE RATES, EXPORTS, EXTERNAL TARIFF, EXTERNAL TARIFFS, FACTOR ENDOWMENTS, FEDERAL RESERVE, FEDERAL RESERVE BANK, FINANCIAL SUPPORT, FLEXIBLE EXCHANGE RATES, FREE TRADE, FREE TRADE AGREEMENT, FREE TRADE AGREEMENTS, FREE TRADE AREA, FREE TRADE AREAS, FREE TRADE ASSOCIATION, FREE TRADE ZONES, FUTURE RESEARCH, GDP, GLOBAL ECONOMIC PROSPECTS, GLOBAL ECONOMY, GLOBAL MARKET, GLOBAL TRADE, GRAVITY EQUATION, GRAVITY MODEL, GRAVITY MODELS, HARMONIZATION, IMPACT OF TRADE, INEQUALITY, INTELLECTUAL PROPERTY, INTELLECTUAL PROPERTY RIGHTS, INTERNAL TRADE, INTERNATIONAL BANK, INTERNATIONAL ECONOMICS, INTERNATIONAL TRADE, LIBERALIZATIONS, LOW-INCOME COUNTRIES, MARKET ACCESS, MATURE MARKETS, MIDDLE-INCOME COUNTRIES, MULTILATERAL TRADE, MULTILATERAL TRADE LIBERALIZATION, MULTIPLIERS, NATIONAL INCOME, OPPORTUNITY COST, OUTPUT, PARTICULAR COUNTRIES, POLICY RESEARCH, POLITICAL ECONOMY, POTENTIAL BENEFITS, PREFERENTIAL AGREEMENTS, PREFERENTIAL TRADE, PREFERENTIAL TRADE AGREEMENT, PREFERENTIAL TRADE AGREEMENTS, PREFERENTIAL TRADING ARRANGEMENTS, PROTECTIONIST, REAL GDP, RED TAPE, REGIONAL AGREEMENTS, REGIONAL INTEGRATION, REGIONAL TRADE, REGIONAL TRADE AGREEMENTS, REGIONAL TRADE ARRANGEMENTS, REGIONALISM, REGIONALIZATION, RESTRICTIVE RULES OF ORIGIN, SIGNATORY COUNTRIES, TARIFF SCHEDULES, TECHNOLOGY TRANSFER, TOTAL FACTOR PRODUCTIVITY, TRADE AGREEMENT, TRADE AGREEMENTS, TRADE BARRIER, TRADE BARRIERS, TRADE CONCESSIONS, TRADE COSTS, TRADE CREATION, TRADE DIVERSION, TRADE EFFECTS, TRADE FACILITATION, TRADE FLOWS, TRADE INTEGRATION, TRADE LIBERALIZATION, TRADE MORE, TRADE PARTNERS, TRADE POLICY, TRADE POLICY REFORMS, TRADE VOLUME, TRADE VOLUMES, TRADING BLOCS, TRADING SYSTEM, TRANSFER OF TECHNOLOGY, TRANSPORT COSTS, UTILITY FUNCTION, VOLUME OF TRADE, WELFARE GAINS, WORLD DEVELOPMENT INDICATORS, WORLD ECONOMY, WORLD TRADE, WORLD TRADE ORGANIZATION