Trade effects of continental and intercontinental preferential trade agreements
- Autores: Salvador Gil Pareja, Rafael Llorca Vivero, José Antonio Martínez Serrano
- Localización: Documentos de Trabajo FUNCAS, ISSN-e 1988-8767, Nº. 486, 2009
- Idioma: inglés
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Resumen
The specialised literature calls preferential trade agreements (PTAs) that are drawn along continental lines natural, to distinguish them from intercontinental PTAs, which are called unnatural. The central statement of the hypothesis of "natural" trading partners is that to the extent that trade follows the natural lines dictated by proximity the formation of regional trading blocs is good. Such natural blocs are contrasted with unnatural blocs, PTAs between countries on different continents, which are less likely to be welfare improving through their impact on trade. The goal of this paper is to determine the effect on trade of continental and intercontinental PTAs. To this end, using the gravity equation we estimate trade creation and trade diversion effects of both kinds of PTAs on a sample of 182 countries over the period 1980-2007. The results indicate that trade creation forces prevail over trade diverting ones in continental PTAs whereas this is not the case for intercontinental preferential agreements.
