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FTA effects on agricultural trade with matching approaches

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  • Lee, GaSeul
  • Lim, Song Soo

Abstract

While the trade effect of free trade agreements (FTAs) is a global issue, little research has examined the economic effects of trade liberalization on agricultural products with robust empirical methods. In this study, propensity score matching for controlling selection bias is used to examine and analyze the effect of FTAs on the trade of South Korea's agricultural products. To enhance the robustness of the estimated results, differences between the FTA treatment effects in 2010 and 2012 are analyzed. The results reveal that the effect of FTAs on agricultural trade varies slightly, depending on the matching approach used; however, the signs of all estimated average treatment effects on the treated (ATT) values are positive. Analysis of the difference between selection bias controlled through matching and uncontrolled selection bias shows that the value of the average treatment effect (ATE) with uncontrolled bias is greater than the ATT estimate calculated through matching. This implies that controlled versus uncontrolled selection bias can result in different ATE and ATT estimates, and that previous studies on FTA trade effects have overestimated the effect, because selection bias was not fully addressed.

Suggested Citation

  • Lee, GaSeul & Lim, Song Soo, 2015. "FTA effects on agricultural trade with matching approaches," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 9, pages 1-26.
  • Handle: RePEc:zbw:ifweej:201543
    DOI: 10.5018/economics-ejournal.ja.2015-43
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    References listed on IDEAS

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    Cited by:

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    2. Chi, Pei-Yu & Lee, Kuei-Chun & Chang, Kuo-I, 2022. "Causal effect of tourist visa exemption schemes on international tourist arrivals," Economic Analysis and Policy, Elsevier, vol. 75(C), pages 427-449.
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    4. Nadezda JANKELOVA & Dusan MASAR & Stefania MORICOVA, 2017. "Risk factors in the agriculture sector," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 63(6), pages 247-258.

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    More about this item

    Keywords

    free trade agreement; agricultural trade; selection bias; propensity score matching;
    All these keywords.

    JEL classification:

    • C54 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Quantitative Policy Modeling
    • F15 - International Economics - - Trade - - - Economic Integration
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade

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