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Preferential and non-preferential trade flows in world trade

Author

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  • Grether, Jean-Marie
  • Olarreaga, Marcelo

Abstract

This paper quantifies the extent of preferential trade as a share of total world trade in different regions of the world and for two periods. Results show that: i) preferential trade represented 40% of world trade in the period 1988-1992 and it slightly increased to 42% during the period 1993-1997; ii) during the second period, agricultural products generally benefited more from the existence of preferential trade agreements than industrial products (maybe due to GATT-exemption); iii) the regional distribution of preferential trade is relatively uneven with a significant share of preferential trade in Western Europe (around 70 per cent), relatively low values in the Western Hemisphere (around 25 per cent), very low shares in Asia and Oceania (around 4 per cent) and average values in the rest-of-the-world (Eastern Europe and Africa); iv) the largest increase in shares of preferential trade between the two periods has occurred in the Western Hemisphere and in Eastern-Europe and Africa; v) at the country level there is an inverted-u-shape relationship between the share of preferential trade and the size and GDP per capita of individual countries; vi) countries which are highly open to trade tend to have a larger share of preferential trade on total trade in the period 1993-1997, suggesting that preferential and non-preferential trade can be seen as complements.

Suggested Citation

  • Grether, Jean-Marie & Olarreaga, Marcelo, 1998. "Preferential and non-preferential trade flows in world trade," WTO Staff Working Papers ERAD-98-10, World Trade Organization (WTO), Economic Research and Statistics Division.
  • Handle: RePEc:zbw:wtowps:erad9810
    DOI: 10.30875/dd58ce9d-en
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    References listed on IDEAS

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    2. Bagwell, Kyle & Staiger, Robert W, 1997. "Multilateral Tariff Cooperation during the Formation of Free Trade Areas," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(2), pages 291-319, May.
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    5. Sapir, Andre, 1998. "The political economy of EC regionalism," European Economic Review, Elsevier, vol. 42(3-5), pages 717-732, May.
    6. Winters, L. Alan, 1996. "Regionalism versus multilateralism," Policy Research Working Paper Series 1687, The World Bank.
    7. Low, Patrick & Olarreaga, Marcelo & Suarez, Javier, 1998. "Does globalization cause a higher concentration of international trade and investment flows?," WTO Staff Working Papers ERAD-98-08, World Trade Organization (WTO), Economic Research and Statistics Division.
    8. Levy, Philip I, 1997. "A Political-Economic Analysis of Free-Trade Agreements," American Economic Review, American Economic Association, vol. 87(4), pages 506-519, September.
    9. Arvind Panagariya & Jagdish Bhagwati, 1996. "The Economics of Preferential Trade Agreements," Books, American Enterprise Institute, number 51856, September.
    10. Schiff, Maurice, 1997. "Small is Beautiful: Preferential Trade Agreements and the Impact of Country Size, Market Share, and Smuggling," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 12, pages 359-387.
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    Cited by:

    1. Austria, Myrna S., 2002. "The Philippines in the Global Trading Environment: Looking Back and the Road Ahead," Discussion Papers DP 2002-15, Philippine Institute for Development Studies.
    2. Egger, Peter Hannes & Egger, Peter, 2016. "Heterogeneous Effects of Tariff and Nontariff Policy Barriers in General Equilibrium," VfS Annual Conference 2016 (Augsburg): Demographic Change 145675, Verein für Socialpolitik / German Economic Association.
    3. DeMaria, Federica & Drogue, Sophie & Matthews, Alan, 2008. "Agro-Food Preferences in the EU's GSP Scheme: An Analysis of Changes between 2004 and 2006," Working Papers 6151, TRADEAG - Agricultural Trade Agreements.
    4. Emanuel Ornelas, 2000. "Free Trade Areas with Politically Active Oligopolies," Econometric Society World Congress 2000 Contributed Papers 1457, Econometric Society.

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    More about this item

    Keywords

    International trade; preferential trade agreements;

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation

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