Diversion Effect of Economic Integration Agreements
Main Article Content
Abstract
Signing Economic Integration Agreements has proliferated during last three decades. A country signs more and more agreements. Owning the agreements not only generates trade creation but also trade diversion. The diversion effect of Economic Integration Agreements (EIAs) on the probability of products survival and export growth in a market is found in current paper. Using the probit function for 149 countries in SITC 4-digit level from 1962 to 2000, we find the hazard rate of product ceasing increases if a country signs any other EIAs other than its partner (both importer and exporter), and the export growth decreases in the case of an importer owns any other EIA other than its partner.
Keywords:
EIAs, hazard rate, importing outsiders, exporting outsiders.
References
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[3] A. Obashi, “Stability of Production Networks in East Asia: Duration and Survival of trade”, Japan and the World Economy 22(1) (2010) 21-30.
[4] J. Rauch, J. Watson, “Starting Small in an Unfamiliar Environment”, International Journal of Industrial Organization 21(7) (2003) 1021-1042.
[5] T. Besedeš, “A Search Cost Perspective on Formation and Duration of Trade”, Review of International Economics 16(5) (2008) 835-849.
[6] T. Besedeš, T. Prusa, “The Role of Extensive and Intensive Margins and Export Growth”, Journal of Development Economics 96(2) (2011) 371-379.
[7] W. Hess, M. Persson, “Exploring the Duration of EU imports”, Review of World Economics 147(4) (2011) 665-692.
[8] V. Nitsch, “Die another Day: Duration in German Import Trade”, Review of World Economics 145(1) (2009) 133-154.
[9] M. Fugazza, A.C. Molina, “On the Determinants of Exports Survival”, Policy Issues in International Trade and Commodities Study Series, United Nations Conference on Trade and Development, No. 46, 2011.
[10] W.C. Chen, “Innovation and Duration of Exports”, Economics Letters 115(2) (2012) 305-308.
[11] A.B. Bernard, J.B. Jensen, “Why some Firms Export?”, Review of Economics and Statistics 86(2) (2004) 561-569.
[12] P. Ilmakunnas, S. Nurmi, “Dynamics of Export Market Entry and Exit”, Scand. J. of Economics 112(1) (2010) 101-126.
[13] O. Cadot, L. Iacovone, D. Pierola, F. Rauch, “Success and Failure of African Exporters”, Journal of Development Economics 101 (2013) 284-296.
[14] T. Besedeš, J. Moreno-Cruz, V. Nitsch, “Trade Integration and the Fragility of Trade Relationships: Theory and Empirics”, Manuscript. http://besedes.econ.gatech.edu/wp-content/uploads/sites/322/2016/10/besedes-eia.pdf/, 2016 (accessed 20 October 2019).
[15] D.N. Kamuganga, “Does Intra-African Regional Trade Cooperation Enhance Export Survival?”, Graduate Institute of International and Development Studies Working Paper No: 16, 2012.
[16] M.L. Recalde, L.M. Florensa, P.G. Degiovanni, “Latin American Integration and the Survival of Trade Relationship”, 17th European Trade Study Group (ETSG) Conference, Helsinki (Finland), 2016.
[17] K. Türkcan, H. Saygılı, “Economic Integration Agreements and the Survival of Exports”, Journal of Economic Integration 33(1) (2018) 1046-1095.
[18] Anderson, J. James, Y. Yotov, “Terms of Trade and Global Efficiency Effects of Free Trade Agreements, 1990-2002”, Journal of International Economics 99 (2016) 279-298.
[19] J.A. Frankel, “Regional Trading Blocs”, Institute of International Economics, 1997.
[20] R. Adams, P. Dee, J. Gali, G. McGuire, “The Trade and Investment Effects of Preferential Trading Arrangements - Old and New Evidence”, Productivity Commission Staff Working Paper, Canberra, 2003.
[21] Carrère, “Revisiting the Effects of Regional Trade Agreements on Trade Flows with Proper Specification of The Gravity Model”, European Economic Review 50 (2006) 223-247.
[22] M. Dai, Y.V. Yotov, T. Zylkin, “On the Trade-Diversion Effects of Free Trade Agreements”, Economics Letters 122(2) (2014) 321-325.
[23] S. Yang, I. Martinez-Zarzoso, “A panel data analysis of trade creation and trade diversion effects: The case of ASEAN-China Free Trade Area”, China Economic Review 29 (2014) 138-151.
[24] P. Esposito, “Trade Creation, Trade Diversion and Imbalances in the EMU”, Economic Modelling 60 (2017) 462-472.
[25] A. Mattoo, A. Mulabdic, M. Ruta, “Trade Creation and trade Diversion in Deep Agreements”, World Bank, Policy Research Working Paper 8206, 2017.
[26] R.C. Feenstra, R.E. Lipsey, H. Deng, A.C. Ma, H. Mo, “World Trade Flows: 1962-2000”, NBER Working Papers, No. 11040, 2005.
[27] W. Hess, M. Persson, “The Duration of Trade Revisited: Continuous-Time vs. Discrete-Time Hazards”, Empirical Economics 43(3) (2012) 1083-1107.
[28] T. Besedeš, V. Nitsch, “Trade Integration and the Fragility of Trade Relationships: Product Level Perspective”, Trade Policy, No. B08-V2, ZBW, 2013.
[29] S.L. Baier, J.H. Bergstrand, M. Feng, “Economic Integration Agreements and the Margins of International Trade”, Journal of International Economics 93(2) (2014) 339-350.
[30] R. Segura-Cayuela, J.M. Vilarrubia, “Uncertainty and Entry into Export Markets”, Bank of Spain Working Paper, 0811, 2008.