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The Free Trade Agreement between Chile and the EU: Its Potential Impact on Chile´s Export Industry

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  • Felicitas Nowak-Lehmann D.

    (Ibero-Amerika Institut für Wirtschaftsforschung der Universität Göttingen)

  • Dierk Herzer

    (Ibero-Amerika Institut für Wirtschaftsforschung der Universität Göttingen)

  • Sebastian Vollmer

    (Ibero-Amerika Institut für Wirtschaftsforschung der Universität Göttingen)

Abstract

Bilateral Free Trade Agreements (FTAs) and unilateral trade liberalization have been two strategies used extensively by Chile to expand its exports and improve its competitive position in the world markets. It is the objective of this paper to analyze the role of trade agreements, price competitiveness, real income, per capita income differences and transport costs in Chilean export trade with the EU. To this end, Chile’s most important export sectors, namely fish, fruit, beverages, ores, copper, and wood and products thereof are investigated using panel data from Chile’s main trading partners in the EU over the period 1988-2002. The econometric model used is a refined augmented gravity model. It is found that the FTA between Chile and the EU, if fish, fruit and wine were included, would have a noticeable impact on Chilean export performance. Price competitiveness is important in most of the sectors under investigation. As expected, the relevance and impact of transport costs on exports do vary from sector to sector.

Suggested Citation

  • Felicitas Nowak-Lehmann D. & Dierk Herzer & Sebastian Vollmer, 2005. "The Free Trade Agreement between Chile and the EU: Its Potential Impact on Chile´s Export Industry," Ibero America Institute for Econ. Research (IAI) Discussion Papers 125, Ibero-America Institute for Economic Research.
    • Handle: RePEc:got:iaidps:125
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    References listed on IDEAS

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    1. 38. Selected Readings on World Development in journal AEID: America, 2001-2020
      by MCG Blogs de Economía in Euro-American Association: World Development on 2020-01-17 20:24:00

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    Cited by:

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    3. Brieuc Monfort, 2008. "Chile: Trade Performance, Trade Liberalization, and Competitiveness," IMF Working Papers 2008/128, International Monetary Fund.

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    More about this item

    Keywords

    EU-Chile trade agreement; sectoral trade flows; gravity model; panel analysis;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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