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2 A review of the PTA theory 2.1 The static effects of PTA well-being 2.2 The dynamic impact of the PTA on multilateral liberalization 2.3 The impact of non-governmental non-trade provisions of the PTA 2.4 Summary Medvedev D (2011) Beyond Trade: The Impact of Preferential Trade Agreements on DLIN flows. World Dev 40 (1):49-61. doi.org/10.1016/j.worlddev.2011.04.036 Jaumotte F (2004) Foreign direct investment and regional trade agreements: the market size effect has been re-examined (IMF Working Paper 206). IMF, Washington, D.C 3 Review of Existing Empirical Data 3.1 Methods of Evaluation of PTAs 3.2 Evidence of Commercial Creation and Distortion effects of PTA – Evaluation of the First Wave By issues 3.3 Evid 3.4 Evidence on investment creation and diversion effects of PTAs – assessment of third wave issues 3.5 Summary Hayakawa, K Kimura F (2015) To what extent do free trade agreements reduce the impact on trade? Open Econ Rev 26 (4):711-729 Osnago A, Rocha N, Ruta M (2016) Do deep trade agreements encourage vertical direct investment? The World Bank Economic Review, Vol. 30, pp S119-S125 Each methodology has its strengths and weaknesses. Case studies in different countries have the advantage of being communicated more consistently and making it easier to track and take into account changes to certain control variables (e.g. B tax policy, etc.). However, empirical generalizations from such studies are limited to similar contexts. The findings of longitudinal studies are potentially generalized, but the data used are more likely to be inconsistently reported, and researchers often have to follow political differences in what has been done in the host and source country. Foster N, Poeschl J, Stehrer R (2011) The impact of preferential trade agreements on international trade margins. Econ Syst 35 (1): 84-97 In this paper, we take into account the trade effects of preferential trade agreements (EPAs) for a large sample of countries during the period 1962-2000. The paper builds on existing literature by examining whether the significant effects of ATPs are due to a change in export diversity (large margin) or a change in the volume of existing products (intense margin). To tackle this problem, we use the frequently used gravitational equation, as well as an appropriate approach to solving potential self-selection problems.

Our results indicate that exports are responding positively to the formation of an ATP between countries and that much of this increase in exports is done along the large margin. We also show that the large margin is more in response to the formation of a PTA among large exporters and large pairs of countries. Kohl T, Trojanowska S (2015) Heterogeneous trade agreements, WTO membership and international trade: an analysis with a coherent economy. Appl Econ 47 (33):3499-3509 Buthe T, Milner H (2014) Foreign direct investment and institutional diversity in trade agreements: credibility, commitment and economic flows in developing countries, 1971-2007. World Polit 66(01):88-122 ▶ This paper examines the impact of the PTA on the volume and diversity of bilateral trade. ▶ PTA are commercial and simultaneous exports are increasing by about 12 per cent. ▶ The trade effects of ATPs are greater for small countries and country couples. ▶ EDPs have an effect on trade, including increasing the diversity of products marketed.

▶ PTA have a greater influence on the variety that is marketed in large pairs of countries. Fixed or random effects? Specific unmonitored factors can be taken into account in the estimate by a fixed-effect model (EMF) or by a random effect model (REM). In an EGF, these unsupervised characteristics are added together in the intercept and each country therefore has a different interception whereas in an REM, they are considered part of the concept of error (Baltagi 2008).