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Disaggregating PTAs at the Role of International Division of Labor on PTA Formation

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  • Hazel Parcon

    (Department of Economics, University of Hawaii at Manoa)

Abstract

This paper shows that additional insights on PTA formation can be gained from separating North-South, North-North, and South-South country pairs. Inter-industry trade is mostly significant for all country pairs and intra-industry trade has a positive impact only for North-South and North-North country pairs. Controlling for geographical proximity, countries choose PTA partners with which they have a history of trading. Using a simple model, this paper demonstrates that trade protection is not the necessary outcome with international product fragmentation. Empirical findings support the hypothesis that international division of labor has influenced the formation of North- South PTAs.

Suggested Citation

  • Hazel Parcon, 2008. "Disaggregating PTAs at the Role of International Division of Labor on PTA Formation," Working Papers 200806, University of Hawaii at Manoa, Department of Economics.
    • Handle: RePEc:hai:wpaper:200806
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    File URL: http://www.economics.hawaii.edu/research/workingpapers/WP_08-6.pdf
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    More about this item

    Keywords

    preferential trading agreements; product fragmentation; trade policy;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration

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