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

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  • 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
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    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

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