Diversion Effect of Economic Integration Agreements

2019 ◽  
Vol 35 (5E) ◽  
Author(s):  
Nguyen Thi Hoang Oanh ◽  
Duong Thi Thuy Linh
Keyword(s):  
Economic Integration ◽  
Hazard Rate ◽  
Trade Diversion ◽  
Export Growth ◽  
Current Paper ◽  
Trade Creation ◽  
Economic Integration Agreements

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.

scholarly journals Trade creation and trade diversion of economic integration agreements revisited: a constrained panel pseudo-maximum likelihood approach

2020 ◽  
Vol 156 (4) ◽  
pp. 985-1024 ◽  
Author(s):  
Michael Pfaffermayr
Keyword(s):  
Economic Integration ◽  
Functional Dependence ◽  
Trade Diversion ◽  
Delta Method ◽  
Trade Creation ◽  
Maximum Likelihood Approach ◽  
Likelihood Approach ◽  
Economic Integration Agreements ◽  
Cost Parameters ◽  
Pseudo Maximum Likelihood

Abstract For PPML estimation of high-dimensional structural gravity panel models it proves useful to exploit the equilibrium restrictions imposed by the system of multilateral resistances. The main advantage of this approach lies in the functional dependence of the parameters of all dummy variables on the structural trade cost parameters. Moreover, the delta method is used to establish confidence intervals of counterfactual changes. Using the constrained panel PPML estimator for a panel of 65 countries in the period 1994–2012 indicates significant trade creation of economic integration agreements with average ranging in between 12.2 and 30.3% in 2012. Results also point to substantial domestic and international trade diversion, where the former dominates the latter.

Trade Creation or Trade Diversion in ASEAN and ASEAN+6 FTAs: Trade Indicators Approach

2015 ◽  
pp. 25-41
Author(s):  
Anh Tu Thuy ◽  
Ngoc Le Minh
Keyword(s):  
Comparative Advantage ◽  
Wheat Gluten ◽  
Free Trade Area ◽  
Private Investment ◽  
Trade Diversion ◽  
Trade Creation ◽  
Public And Private ◽  
Trade Area ◽  
Economic Partnership ◽  
Regional Comprehensive Economic Partnership

This paper makes use of two trade indicators, Revealed Comparative Advantage (RCA) and Regional Orientation (RO), to evaluate the economic impacts of the ASEAN Free Trade Area (The) and the Regional Comprehensive Economic Partnership (RCEP) on Vietnamese commodities at the Harmonized System (HS) 2-digit level. Several sectors in which Vietnam has revealed a comparative advantage, has benefited from the AFTA, and would continue to enjoy trade creation from the RCEP, are: Cereals (10), Salt, sulphur, earth, stone, plaster, lime and cement (25), Rubber (40), Knitted or crocheted fabric (60), etc. More importantly, the result provides a list of commodities in which Vietnam has a comparative advantage and only experiences trade creation when participating in the RCEP. These are: Milling products, malt, starches, inulin, wheat gluten (11), Vegetable plaiting materials, vegetable products not elsewhere specified (14), Wood and articles of wood, wood charcoal (44), etc. Findings also show commodities in which Vietnam has a comparative advantage; but are not well positioned in the RCEP market yet, e.g. Cereal, flour, starch, milk preparations and products (19) and Manmade staple fibres (55). If sufficient investment decisions and marketing strategies are applied to these commodities, they will well penetrate the RCEP market and bring trade creation and welfare improvement to Vietnam. Public and private investment should consider the above-mentioned commodities as targets to leapfrog the benefits of RCEP.

Was India Right in Not Joining RCEP? A Cost–Benefit Analysis

2021 ◽  
pp. 097492842110477
Author(s):  
Monika Jain
Keyword(s):  
New Zealand ◽  
South Korea ◽  
Free Trade ◽  
Trade Diversion ◽  
Trade Agreements ◽  
Asia Pacific ◽  
Trade Creation ◽  
Asean Countries ◽  
The Cost ◽  
The Impact

India dropped out of the Regional Comprehensive Economic Partnership (RCEP), which included the Association of Southeast Asian Nations (ASEAN) countries, China, South Korea, New Zealand, Japan and Australia, after negotiating for almost seven years in November 2018 on the grounds of national interest and also that free trade agreements (FTAs) did not amount to free trade and led to more trade diversion than trade creation. The cost and benefit of a regional agreement depend on the amount of trade creation with respect to trade diversion (Panagriya, 2000). This study tries to examine India’s concerns and at the same time, highlights the cost of not joining RCEP. India’s trade deficit with 11 out of the 15 RCEP nations has been a major cause of concern. Unfavourable trade balance, concerns about the impact on dairy sector, economic slowdown, past experience with FTA’s, China factor, data localisation, rules of origin, the experience of ASEAN countries with Sino-FTA have been some of the reasons behind India’s decision to opt-out of this mega multilateral agreement. Also, bilateral trade agreements with some RCEP countries such as Japan, Malaysia, Singapore, Thailand and South Korea were operational. A multilateral trade agreement with ASEAN countries was very much in place. So, trade between India and 12 of the RCEP member countries would not have changed much after India’s inclusion in RCEP. The impact of lower tariffs would have been evident for the remaining three countries: China, Australia and New Zealand. Furthermore, there was fear of a massive surge in imports of manufactures from China, dairy imports from Australia and New Zealand. This study also examines the long term impact of this decision and if India has missed out on becoming a part of the global value chain and gaining greater market access in the Asia Pacific region. India’s policy of import substitution and protectionism did not capitulate desired results in the past. Hence, a critical evaluation of India’s decision and some validation on her concerns and fears have been done.

Sign in / Sign up

Export Citation Format

Share Document