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

Rahul Sen, Sadhana Srivastava and Don Webber

Working Papers from Department of Accounting, Economics and Finance, Bristol Business School, 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.

Keywords: Trade creation; Trade diversion; Distance; Trade agreements (search for similar items in EconPapers)
JEL-codes: F11 F13 F14 F15 (search for similar items in EconPapers)
Date: 2015-01-07
New Economics Papers: this item is included in nep-int
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:uwe:wpaper:20151507

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