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Analyzing the Infrastructure Impacts of Free Trade Agreements

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  • Bachmann, Christian

Abstract

This paper presents a modelling framework to analyze the domestic transportation impacts of FTAs. In general, the analysis requires: 1) a model of the global economy that quantifies the impacts of a FTA on international trade flows; 2) a multi-scale analysis that links changes in national production, consumption, and international imports and exports to subnational trade flows; and 3) a freight model that translates all trade flows into freight flows. Computable General Equilibrium (CGE) models such as the GTAP Model are currently the most suitable alternative for simulating complex economic policies such as FTAs because they comprehensively model the entire economy, the interdependency between all of its parts, and the microeconomic behavior within these parts. A Multi-Scale Multi-Regional Input-Output (MSMRIO) analysis then links global economic impacts to individual states, provinces, or regions using the interindustry and interregional structure of the national economy. Freight flow modeling can start with a commodity-based model in the initial implementation of the analysis, and once operational, models of logistics choices can be incorporated to upgrade the commodity-based model to an Aggregate-Disaggregate-Aggregate (ADA) freight model. A range of detail and theoretical consistencies in implementations is described in the paper, compromising data and labor requirements for the quantity and quality of the overall model’s capabilities. The complexity of the interactions between FTAs and the transportation system and the challenges of comprehensively modelling this process is also discussed. Preliminary results for partial implementations of the framework are presented for the CKFTA and CETA

Suggested Citation

  • Bachmann, Christian, 2016. "Analyzing the Infrastructure Impacts of Free Trade Agreements," Conference papers 332725, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:332725
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    File URL: https://ageconsearch.umn.edu/record/332725/files/8180.pdf
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