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Effects of preferential trade agreements in the presence of zero trade flows: the cases of China and India

Author

Listed:
  • Rahul Sen

    (Auckland University of Technology)

  • Sadhana Srivastava

    (Auckland University of Technology)

  • Don J Webber

    (University of the West of England, Bristol)

Abstract

The two most populous countries have embarked upon an extensive array of preferential trading agreements (PTAs). This paper examines the impacts of eleven PTAs on China’s and India’s trade creation and trade diversion using an augmented gravity model incorporating zero trade flows. Results suggest that PTAs were net trade creating for China’s exports and imports; the same PTAs were net trade diverting for India’s exports and insignificant for her imports. For both countries, most ASEAN+6 PTAs had created intra- and extra-bloc trade. The partial scope Asia-Pacific Trade Agreement generated the strongest net export creation effect.

Suggested Citation

  • Rahul Sen & Sadhana Srivastava & Don J Webber, 2015. "Effects of preferential trade agreements in the presence of zero trade flows: the cases of China and India," Working Papers 20151507, Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol.
    • Handle: RePEc:uwe:wpaper:20151507
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    File URL: http://www2.uwe.ac.uk/faculties/BBS/BUS/Research/Economics%20Papers%202015/1507.pdf
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    More about this item

    Keywords

    Trade creation; Trade diversion; Distance; Trade agreements;
    All these keywords.

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration

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