Effects of Hub-and-Spoke Free Trade Agreements on Trade: Panel Data Analysis
Alba, Joseph D.; Hur, Jung; Park, Donghyun | October 2008
Abstract
Overlapping free trade agreements (FTAs) have given rise to hub-and-spoke
FTAs that may promote trade by giving an export advantage to the FTA hub
country. We empirically investigate the effect of hub-and-spoke FTAs on trade
using panel data consisting of 99 countries and covering the period 1960–1999.
Our empirical analysis of the panel data yields three notable findings. First, FTAs
have a significant and positive impact on trade. Second, hub-and-spoke FTAs
increase trade above and beyond FTAs, and thus reinforce the trade-boosting
effects of FTAs. Third, our results imply an annual growth rate of 4.9% in bilateral
trade and hence a doubling of trade after 14½ years between FTA partners. Our
results indicate that the hub-and-spoke nature of FTAs has a positive effect on
trade, in addition to the direct, trade-liberalizing effect of FTAs. Therefore, in a
world of overlapping FTAs, a more accurate empirical analysis of the relationship
between FTAs and trade calls for taking into account the hub-and-spoke
characteristic of FTAs.
Citation
Alba, Joseph D.; Hur, Jung; Park, Donghyun. 2008. Effects of Hub-and-Spoke Free Trade Agreements on Trade: Panel Data Analysis. © Asian Development Bank. http://hdl.handle.net/11540/1781. License: CC BY 3.0 IGO.ISSN
1655-5252
Keywords
Trade Facilitation
Trade
Economic integration
Regional Economic Integration
Free Trade
Trade Agreements
Trade Policy
Economic Development
Economics
International Economics
Economic planning
Economic structure
Growth policy
Trade relations
Trade policy
Trade policy
Economic development
Regional economics
Economic forecasting
Economic development projects
Success in business
Business
Free trade
Business
Economics
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Citable URI
http://hdl.handle.net/11540/1781Metadata
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