The breadth of preferential trade agreements and the margins of exports

Abstract

We use recently available data on the core economic provisions of PTAs to identify which (types of) provisions seem to promote bilateral exports and the intensive and extensive margins of exports. Our evidence suggests that measures applied at the border tend to be aimed at expanding existing trade, while measures applied behind the border are aimed at creating trade in new products. Preferential measures tended to increase bilateral total exports and bilateral exports at the intensive margin, but have no significant effect on bilateral exports at the extensive margin. Measures applied on an MFN basis are unlikely to provide improved market access for PTA partners. When included individually we find that no provision has a statistically significant effect of the same sign on both trade margins, confirming the view that existing and potential exporters have opposing interests in PTA formation. Finally, we provide estimated effects for selected PTAs.

Do deep regional trade agreements facilitate regional production networks in Latin American and Caribbean countries?

“…9 Considering both cases apply to some LAC countries, we use only export data in our main analysis. However, to show that our findings are not affected by the missing observations, following, Falvey and Foster-McGregor (2022), Kohl et al (2016), Orefice and Rocha (2014), we use the mirror import data in the robustness check in Section 5-1.…”

“…This study sources the data on the depth of RTAs from the "Deep Trade Agreements Database 1.0" by the World Bank. Recent studies including Boffa et al (2019), Falvey and Foster-McGregor (2022), Jinji et al (2019Jinji et al ( , 2022a, Laget et al (2020), andMattoo et al (2022) have used the data from this database for the measures of the depth of RTAs. The database was originally provided by Horn et al (2010) and was extended by Hofmann et al (2017Hofmann et al ( , 2019.…”

“…Lastly, several recent studies have analyzed the effects of the depth of RTAs measured by the coverage and legal enforceability of WTO+ and WTO-X policy areas on bilateral exports (Falvey & Foster-McGregor, 2022;Kohl et al, 2016;Mattoo et al, 2022), international technology spillovers (Jinji et al, 2019(Jinji et al, , 2022a, and trade in value added (Boffa et al, 2019;Laget et al, 2020). However, those studies do not systematically focus on the LAC region.…”

How Do Productivity Benefits Spill Over Across Firms? Explorations in a Heterogeneous Firm Applied General Equilibrium Trade Model

“…However, productivity gaps across fi rms (in a nation) and across nations (for a fi rm) are important characteristics of such spillovers because some fi rms will be able to absorb the FDI and some will not. Falvey and Foster-McGregor (2022) discussed that licensing and FDI both matter for boosting exports via enhanced technology fl ows. Gima et al (2007) showed that for UK manufacturing fi rms, FDI is a mode of the MNEs to transfer "intangible proprietary assets" for domestic exporters.…”

“…1 For example, under the presidency of Donald Trump, neo-protectionism emerged, leading to a trade war and breakdown of negotiations. "What if" analysis of the foregone policies as well as understanding the impacts on FDI in a complex global production network is informative (Falvey and Foster-McGregor, 2022;Herman, 2022;Olney, 2022;Anderson and Yotov, 2016).…”