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Bilateral vertical specialization between the U.S. and its trade partners — before and after the free trade agreements

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  • Leung, Jennifer Y.

Abstract

The focus of this paper is on examining the effect of free trade agreements on bilateral vertical specialization (VS) in manufacturing between the U.S. and its trading partners. A bilateral VS variable is constructed using input–output analysis before being modeled in an augmented gravity equation. Results show that North American countries are by far the most significant trade partners with the U.S., followed by other Asian and Oceanic countries. The average treatment effect of a free trade agreement is 0.94, which shows that bilateral trade increases, on average, by 155% from a free trade agreement.

Suggested Citation

  • Leung, Jennifer Y., 2016. "Bilateral vertical specialization between the U.S. and its trade partners — before and after the free trade agreements," International Review of Economics & Finance, Elsevier, vol. 45(C), pages 177-196.
    • Handle: RePEc:eee:reveco:v:45:y:2016:i:c:p:177-196
    DOI: 10.1016/j.iref.2016.05.003
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    Cited by:

    1. JunYun Kim & Hongshik Lee & Joonhyung Lee, 2022. "Does Aid for Trade Promote Vertical Specialization?," Asian Economic Journal, East Asian Economic Association, vol. 36(2), pages 127-158, June.
    2. Giuseppe Ricciardo Lamonica, 2020. "How fragmented is the world economy: evidences from the EORA database," RIEDS - Rivista Italiana di Economia, Demografia e Statistica - The Italian Journal of Economic, Demographic and Statistical Studies, SIEDS Societa' Italiana di Economia Demografia e Statistica, vol. 74(2), pages 39-48, April-Jun.
    3. Giuseppe Ricciardo Lamonica & Luca Salvati & Margherita Carlucci, 2020. "Vertical specialization across the world: evidence from the world input-output table," RIEDS - Rivista Italiana di Economia, Demografia e Statistica - The Italian Journal of Economic, Demographic and Statistical Studies, SIEDS Societa' Italiana di Economia Demografia e Statistica, vol. 74(1), pages 17-28, January-M.

    More about this item

    Keywords

    Bilateral vertical specialization; U.S. free trade agreements; Input–output analysis;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade

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