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Agricultural trade liberalization and domestic fertilizer use: Evidence from China-ASEAN free trade agreement

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  • Nie, Fei
  • Li, Jian
  • Bi, Xiang
  • Li, Gucheng

Abstract

The China-ASEAN (Association of Southeast Asian Nations) Free Trade Agreement (CAFTA) has been recognized as a significant progress in regional economic integration for member countries. While the existing literature has widely studied the trade effects of Free Trade Agreements (FTAs), it remains unclear how it affects environment-related input use. This paper examines the impacts of agricultural trade liberalization on the domestic fertilizer use following the CAFTA. Using a combined dataset consisting of country- and product-level fertilizer use and predictors over the period 1995–2015, this paper empirically examines the impact of CAFTA on the domestic fertilizer use for the exported fresh fruits and vegetables (FFV) from China to ASEAN members. We use the synthesis control method to identify the aggregate impacts of CAFTA on the domestic fertilizer use, followed by the propensity score matching difference-in-difference (PSM-DID) method to examine the mechanism through which fertilizer use is increased. We find that the total volumes of the domestic fertilizer use for Chinese exported FFV increased significantly following the implementation of the Early Harvest Program under CAFTA in 2004. This impact is more evident for exports to the initial ASEAN members compared to the new members. The PSM-DID results suggest that CAFTA increased the degree of export concentration on ASEAN members. The evidence is consistent with the export diversion effect of a customs union instead of the export creation effect due to trade liberalization.

Suggested Citation

  • Nie, Fei & Li, Jian & Bi, Xiang & Li, Gucheng, 2022. "Agricultural trade liberalization and domestic fertilizer use: Evidence from China-ASEAN free trade agreement," Ecological Economics, Elsevier, vol. 195(C).
    • Handle: RePEc:eee:ecolec:v:195:y:2022:i:c:s0921800922000039
    DOI: 10.1016/j.ecolecon.2022.107341
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    More about this item

    Keywords

    Agricultural trade liberalization; Fertilizer use; Fresh fruits and vegetables (FFV); Quasi-experiment; CAFTA;
    All these keywords.

    JEL classification:

    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • F18 - International Economics - - Trade - - - Trade and Environment
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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