The breadth of preferential trade agreements and the margins of exports
Rod Falvey & Neil Foster-McGregor
#2019-012
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 includeds
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.
JEL Classification: F10, F15
Keywords: PTA Breadth, Trade Margins, Gravity Equation