IDEAS home Printed from https://ideas.repec.org/a/eee/wdevel/v38y2010i8p1105-1113.html
   My bibliography  Save this article

Effects of Hub-and-Spoke Free Trade Agreements on Trade: A Panel Data Analysis

Author

Listed:
  • Hur, Jung
  • Alba, Joseph D.
  • Park, Donghyun

Abstract

Summary We use panel data consisting of 96 countries and covering the period 1960-2000 to investigate the effects of free trade agreements (FTAs) and hub-and-spoke systems of FTA on exports. Our empirical results imply an annual growth rate of 5.57% in exports and hence a doubling of exports after 12.4 years between FTA partners. Non-overlapping FTAs account for 4.12%, while hub-and-spoke FTAs account for 1.45% of the estimated export growth rate. This indicates that, in addition to the direct trade liberalizing effect of FTAs, the hub-and-spoke nature of FTAs has an additional positive effect on trade.

Suggested Citation

  • Hur, Jung & Alba, Joseph D. & Park, Donghyun, 2010. "Effects of Hub-and-Spoke Free Trade Agreements on Trade: A Panel Data Analysis," World Development, Elsevier, vol. 38(8), pages 1105-1113, August.
    • Handle: RePEc:eee:wdevel:v:38:y:2010:i:8:p:1105-1113
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0305-750X(10)00028-8
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Christopher F Baum & Mark E. Schaffer & Steven Stillman, 2003. "Instrumental variables and GMM: Estimation and testing," Stata Journal, StataCorp LP, vol. 3(1), pages 1-31, March.
    2. Ronald J. Wonnacott, 1996. "Trade and Investment in a Hub-and-Spoke System Versus a Free Trade Area," The World Economy, Wiley Blackwell, vol. 19(3), pages 237-252, May.
    3. Magee Christopher S, 2003. "Endogenous Preferential Trade Agreements: An Empirical Analysis," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 2(1), pages 1-17, December.
    4. Desmet, Klaus & Facchini, Giovanni & Deltas, George, 2006. "Hub-and-Spoke Free Trade Areas," CEPR Discussion Papers 5960, C.E.P.R. Discussion Papers.
    5. Luca De Benedictis & Roberta De Santis & Claudio Vicarelli, 2005. "Hub-and-Spoke or else? Free trade agreements in the 'enlarged' European Union," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 2(2), pages 245-260, December.
    6. Jong‐Wha Lee & Innwon Park & Kwanho Shin, 2008. "Proliferating Regional Trade Arrangements: Why and Whither?," The World Economy, Wiley Blackwell, vol. 31(12), pages 1525-1557, December.
    7. John Piggott & Alan Woodland (ed.), 1999. "International Trade Policy and the Pacific Rim," International Economic Association Series, Palgrave Macmillan, number 978-1-349-14543-0, December.
    8. Carsten Kowalczyk & Ronald J. Wonnacott, 1992. "Hubs and Spokes, and Free Trade in the Americas," NBER Working Papers 4198, National Bureau of Economic Research, Inc.
    9. James E. Anderson & Eric van Wincoop, 2003. "Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, American Economic Association, vol. 93(1), pages 170-192, March.
    10. Baier, Scott L. & Bergstrand, Jeffrey H., 2007. "Do free trade agreements actually increase members' international trade?," Journal of International Economics, Elsevier, vol. 71(1), pages 72-95, March.
    11. Andrew K. Rose, 2004. "Do We Really Know That the WTO Increases Trade?," American Economic Review, American Economic Association, vol. 94(1), pages 98-114, March.
    12. Kamal Saggi & Halis Murat Yildiz, 2018. "Bilateralism, multilateralism, and the quest for global free trade," World Scientific Book Chapters, in: Kamal Saggi (ed.), Economic Analysis of the Rules and Regulations of the World Trade Organization, chapter 7, pages 156-167, World Scientific Publishing Co. Pte. Ltd..
    13. Baier, Scott L. & Bergstrand, Jeffrey H., 2009. "Bonus vetus OLS: A simple method for approximating international trade-cost effects using the gravity equation," Journal of International Economics, Elsevier, vol. 77(1), pages 77-85, February.
    14. Ronald J. Wonnacott, 1975. "Canada's Future in a World of Trade Blocs: A Proposal," Canadian Public Policy, University of Toronto Press, vol. 1(1), pages 118-130, Winter.
    15. Ronald J. Wonnacott, 1982. "Controlling Trade and Foreign Investment in the Canadian Economy: Some Proposals," Canadian Journal of Economics, Canadian Economics Association, vol. 15(4), pages 567-585, November.
    16. Peter J. Lloyd & Donald Maclaren, 2004. "Gains and Losses from Regional Trading Agreements: A Survey," The Economic Record, The Economic Society of Australia, vol. 80(251), pages 445-467, December.
    17. Soo Yuen Chong & Jung Hur, 2008. "Small Hubs, Large Spokes and Overlapping Free Trade Agreements," The World Economy, Wiley Blackwell, vol. 31(12), pages 1625-1665, December.
    18. Kowalczyk, C. & Wannacott, R.J., 1992. "Hubs and Spokes, and Free Trade in the Americas," University of Western Ontario, Departmental Research Report Series 9209, University of Western Ontario, Department of Economics.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bob Milward, 2015. "On the Historical, Moral and Economic Arguments for Asymmetric Trading Regimes: the case of sub-Saharan Africa," World Economic Review, World Economics Association, vol. 2015(5), pages 1-87, July.
    2. George Deltas & Klaus Desmet & Giovanni Facchini, 2012. "Hub‐and‐spoke free trade areas: theory and evidence from Israel," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 45(3), pages 942-977, August.
    3. Yoshifumi Fukunaga, 2015. "ASEAN's Leadership in the Regional Comprehensive Economic Partnership," Asia and the Pacific Policy Studies, Wiley Blackwell, vol. 2(1), pages 103-115, January.
    4. Emilson C.D. Silva & Chikara Yamaguchi, 2018. "Overlapping Climate Clubs under Transaction Costs," CESifo Working Paper Series 7319, CESifo.
    5. Jiyun Cao, 2015. "The Consideration Of Hub-And-Spoke Status In Fta Formation," Bulletin of Economic Research, Wiley Blackwell, vol. 67(4), pages 382-392, October.
    6. Dmitriy Aleksandrovich Izotov, 2021. "Trade Integration in the Asia-Pacific Region: Decomposition of Effects," Spatial Economics=Prostranstvennaya Ekonomika, Economic Research Institute, Far Eastern Branch, Russian Academy of Sciences (Khabarovsk, Russia), issue 1, pages 66-96.
    7. Teteryatnikova, Mariya, 2018. "R&D in trade networks: The role of asymmetry," International Journal of Industrial Organization, Elsevier, vol. 61(C), pages 307-350.
    8. Jinsoo Park, 2015. "Korea’s linkage strategy between FTA hub policy and middle power leadership in regional economic integration," Asia Europe Journal, Springer, vol. 13(4), pages 379-394, December.
    9. Yang, Yichen & Liu, Wen, 2024. "Free trade agreements and domestic value added in exports: An analysis from the network perspective," Economic Modelling, Elsevier, vol. 132(C).
    10. Juyoung Cheong & Do Won Kwak & Kam Ki Tang, 2015. "Can Trade Agreements Curtail Trade Creation and Prevent Trade Diversion?," Review of International Economics, Wiley Blackwell, vol. 23(2), pages 221-238, May.
    11. Tristan Kohl, 2014. "Do we really know that trade agreements increase trade?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 150(3), pages 443-469, August.
    12. Jung Hur & Hyun-Hoon Lee, 2017. "Apec Has Indeed Created Intra-Regional Trade: A Systematic Empirical Analysis," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 62(05), pages 1077-1095, December.
    13. Kazunobu Hayakawa & Nuttawut Laksanapanyakul & Taiyo Yoshimi, 2021. "Tariff scheme choice," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 157(2), pages 323-346, May.
    14. Fan, Zhaobin & Zhou, Ying & Anwar, Sajid, 2024. "Centralization of trade agreements network and global value chain participation," The Quarterly Review of Economics and Finance, Elsevier, vol. 94(C), pages 11-24.
    15. Benešová, Irena & Novotná, Zuzana & Šánová, Petra & Laputková, A., 2016. "Economic Comparison of Agricultural Sector of Eurasian Countries – Is There Any Potential for Development Through Economic Cooperation?," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 8(2), pages 1-13, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. George Deltas & Klaus Desmet & Giovanni Facchini, 2012. "Hub‐and‐spoke free trade areas: theory and evidence from Israel," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 45(3), pages 942-977, August.
    2. Juyoung Cheong & Do Won Kwak & Kam Ki Tang, 2015. "Can Trade Agreements Curtail Trade Creation and Prevent Trade Diversion?," Review of International Economics, Wiley Blackwell, vol. 23(2), pages 221-238, May.
    3. Jiyun Cao, 2015. "The Consideration Of Hub-And-Spoke Status In Fta Formation," Bulletin of Economic Research, Wiley Blackwell, vol. 67(4), pages 382-392, October.
    4. Desmet, Klaus & Facchini, Giovanni & Deltas, George, 2006. "Hub-and-Spoke Free Trade Areas," CEPR Discussion Papers 5960, C.E.P.R. Discussion Papers.
    5. Teteryatnikova, Mariya, 2018. "R&D in trade networks: The role of asymmetry," International Journal of Industrial Organization, Elsevier, vol. 61(C), pages 307-350.
    6. Clougherty, Joseph A. & Grajek, Michał, 2014. "International standards and international trade: Empirical evidence from ISO 9000 diffusion," International Journal of Industrial Organization, Elsevier, vol. 36(C), pages 70-82.
    7. Cardamone, Paola, 2007. "A Survey of the Assessments of the Effectiveness of Preferential Trade Agreements using Gravity Models," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 60(4), pages 421-473.
    8. Dutt, Pushan, 2020. "The WTO is not passé," European Economic Review, Elsevier, vol. 128(C).
    9. Naoto Jinji & Xingyuan Zhang & Shoji Haruna, 2022. "Deep Integration, Global Firms, and Technology Spillovers," Advances in Japanese Business and Economics, Springer, number 978-981-16-5210-3, June.
    10. Carolina Rojas Sánchez & Álvaro Pío Gómez Olaya2, 2018. "Los acuerdos comerciales bilaterales: el caso Colombiano (1990-2015)," Apuntes del Cenes, Universidad Pedagógica y Tecnológica de Colombia, vol. 37(65), pages 114-156, February.
    11. Nuno Limão, 2016. "Preferential Trade Agreements," NBER Working Papers 22138, National Bureau of Economic Research, Inc.
    12. Innwon Park & Soonchan Park, 2009. "Free Trade Agreements versus Customs Unions: An Examination of East Asia," Asian Economic Papers, MIT Press, vol. 8(2), pages 119-139, Spring.
    13. Tristan Kohl, 2014. "Do we really know that trade agreements increase trade?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 150(3), pages 443-469, August.
    14. Soo Yuen Chong & Jung Hur, 2007. "Overlapping Free Trade Agreements of Singapore-USA-Japan : A Computational Analysis," Trade Working Papers 21931, East Asian Bureau of Economic Research.
    15. Head, Keith & Mayer, Thierry, 2014. "Gravity Equations: Workhorse,Toolkit, and Cookbook," Handbook of International Economics, in: Gopinath, G. & Helpman, . & Rogoff, K. (ed.), Handbook of International Economics, edition 1, volume 4, chapter 0, pages 131-195, Elsevier.
    16. Yoke Fong Kong & Richard Kneller, 2016. "Measuring the Impact of China's Export Growth on its Asian Neighbours," The World Economy, Wiley Blackwell, vol. 39(2), pages 195-220, February.
    17. Salvador Gil & Rafael Llorca & J. Antonio Martínez‐Serrano, 2008. "Assessing the Enlargement and Deepening of the European Union," The World Economy, Wiley Blackwell, vol. 31(9), pages 1253-1272, September.
    18. Teteryatnikova, Mariya, 2018. "R&D in trade networks: The role of asymmetry," International Journal of Industrial Organization, Elsevier, vol. 61(C), pages 307-350.
    19. Jo, Ah-Hyun & Chang, Young-Tae, 2023. "The effect of airport efficiency on air traffic, using DEA and multilateral resistance terms gravity models," Journal of Air Transport Management, Elsevier, vol. 108(C).
    20. Juyoung Cheong & Do Won Kwak & Kam Ki Tang, 2014. "A Within Estimator for Three-Level Data: An Application to the WTO Effect on Trade Flows," Discussion Papers Series 501, School of Economics, University of Queensland, Australia.

    More about this item

    Keywords

    free trade agreement hub and spoke world bilateral trade data panel data analysis fixed effect average treatment effect;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:wdevel:v:38:y:2010:i:8:p:1105-1113. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/worlddev .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.