Abstract
This paper examines how dissimilarity of partner country characteristics affects the change in trade flows under a preferential trade agreement (PTA). Our results show that the more similar the partner countries are, the larger the increase in intra-bloc trade is under a PTA. Particularly, there is a substantial "development neighborhood premium": the gain for developing countries from a PTA among themselves is about two and a half times that from partnering with industrial countries. Our findings challenge the perception that by becoming more integrated with industrial countries, developing countries could automatically gain access to a much larger and lucrative export market.
| Original language | English |
|---|---|
| Pages (from-to) | 222-236 |
| Number of pages | 15 |
| Journal | World Development |
| Volume | 66 |
| DOIs | |
| Publication status | Published - 2015 Feb 1 |
| Externally published | Yes |
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Keywords
- Gravity model
- Heterogeneity
- Preferential trade agreements
- Similarity
- Trade creation
ASJC Scopus subject areas
- Geography, Planning and Development
- Development
- Sociology and Political Science
- Economics and Econometrics
Cite this
Heterogeneous effects of preferential trade agreements : How does partner similarity matter? / Cheong, Juyoung; Kwak, Do Won; Tang, Kam Ki.
In: World Development, Vol. 66, 01.02.2015, p. 222-236.Research output: Contribution to journal › Article
}
TY - JOUR
T1 - Heterogeneous effects of preferential trade agreements
T2 - How does partner similarity matter?
AU - Cheong, Juyoung
AU - Kwak, Do Won
AU - Tang, Kam Ki
PY - 2015/2/1
Y1 - 2015/2/1
N2 - This paper examines how dissimilarity of partner country characteristics affects the change in trade flows under a preferential trade agreement (PTA). Our results show that the more similar the partner countries are, the larger the increase in intra-bloc trade is under a PTA. Particularly, there is a substantial "development neighborhood premium": the gain for developing countries from a PTA among themselves is about two and a half times that from partnering with industrial countries. Our findings challenge the perception that by becoming more integrated with industrial countries, developing countries could automatically gain access to a much larger and lucrative export market.
AB - This paper examines how dissimilarity of partner country characteristics affects the change in trade flows under a preferential trade agreement (PTA). Our results show that the more similar the partner countries are, the larger the increase in intra-bloc trade is under a PTA. Particularly, there is a substantial "development neighborhood premium": the gain for developing countries from a PTA among themselves is about two and a half times that from partnering with industrial countries. Our findings challenge the perception that by becoming more integrated with industrial countries, developing countries could automatically gain access to a much larger and lucrative export market.
KW - Gravity model
KW - Heterogeneity
KW - Preferential trade agreements
KW - Similarity
KW - Trade creation
UR - http://www.scopus.com/inward/record.url?scp=84907863478&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=84907863478&partnerID=8YFLogxK
U2 - 10.1016/j.worlddev.2014.08.021
DO - 10.1016/j.worlddev.2014.08.021
M3 - Article
VL - 66
SP - 222
EP - 236
JO - World Development
JF - World Development
SN - 1873-5991
ER -