Preferential Trade Agreements and the Structure of International Trade


Neil Foster-McGregor and Robert Stehrer

wiiw Working Paper No. 61, January 2010
29 pages including 6 Tables

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In this paper we examine the impact of membership in Preferential Trade Agreements (PTAs) on trade between PTA members. Rather than considering the impact of PTA membership on the volume of trade we consider the impact of membership on the structure of trade. For a large sample of countries over the period 1962-2000 we find that membership in a PTA is associated with an increase in the extent of intra-industry trade. In addition, we find that the effect of PTA membership on IIT is larger when a PTA is formed between two developed countries.


Keywords: Preferential Trade Agreements, intra-industry trade, gravity equation

JEL classification: F10, F15

Countries covered: non specific

Research Areas: International Trade, Competitiveness and FDI