Does Deep Integration Promote Trade Development?

ABSTRACT

Based on the Design of Trade Agreement database, which includes almost all free trade agreements (FTAs) after World War II, this article presents a comprehensive analysis of the development of FTAs. With the increased number of FTAs, more and more clauses in the agreements are focusing on non-tariff trade barriers and the coordination of cross-border measures. This article tests FTAs’ effect on trade. The signing and deepening of FTAs has increased foreign trade, especially in the long run. Furthermore, FTAs have a slightly more significant positive effect on imports than they do on exports.

KEYWORDS:

• Deep integration
• depth of FTAs
• DESTA database
• gravity model

Notes

¹ The statistics of enforcement of FTAs can be extended to 2015, but the effect of FTAs on trade could not be estimated due to the short period, and the statistics of GDP by international organization also ended by 2013, so the sample period in this paper is from 1991 to 2013.

² The result is adjusted by the log form.