Impact Assessment of the Colombia-Korea FTA: An Empirical Approach

David Santiago Caraballo Candela ()
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David Santiago Caraballo Candela: Universidad de los Andes

No 21296, Documentos CEDE from Universidad de los Andes, Facultad de Economía, CEDE

Abstract: This paper examines the impact of the Colombia-Korea Free Trade Agreement (FTA) on trade flows following its entry to force, sanctioned by the Colombian government in 2016. Employing a structural gravity model of trade and synthetic control methods, it estimates trade creation and trade diversion effects at both aggregate and sectoral levels. Results suggest that, while the FTA did not significantly impact overall trade flows, Colombia experienced a notable trade creation effect, with a 54% increase in exports, particularly in agricultural products and heavy metals. In contrast, Korea saw a 28% decline in its trade volume, primarily due to reduced sales of automotive, and industrial and electronic machinery. Evidence also points to null trade diversion effects among the FTA members, which is consistent with expectations given the low economic interdependence between the two countries, as trade flows with their usual regional partners have been sustained.

Keywords: trade flow; FTA; gravity model; synthetic counterfactual (search for similar items in EconPapers)
JEL-codes: F10 F14 F15 (search for similar items in EconPapers)
Pages: 66 pages
Date: 2025-01-14
New Economics Papers: this item is included in nep-int
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Persistent link: https://EconPapers.repec.org/RePEc:col:000089:021296

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