New products or more of the old? Estimating the impact of Canadian free trade agreements on exports

Mumtaz Ahmad () and Imtiaz Ahmad ()
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Mumtaz Ahmad: University of Saskatchewan
Imtiaz Ahmad: National University of Sciences and Technology

Economia e Politica Industriale: Journal of Industrial and Business Economics, 2024, vol. 51, issue 2, No 9, 516 pages

Abstract: Abstract This paper analyzes the effect of Free Trade Agreements (FTAs) on the dollar value of already exported products as recent literature documents an ambiguous impact. We develop a framework that explains the source of ambiguous effects of FTAs on intensive export margins. We use 6-digit bilateral trade data and Canada’s five FTAs to estimate the dynamic effects of the agreements on exports to FTA partners. The pre-agreement export basket is divided into two groups, i.e., products at positive and negative intensive margins. The difference-in-differences estimates show that (i) the export value of both groups of products increases significantly in the short- and long-term for high-income FTA partners (ii)In cases where FTA partners are middle-income economies, the impact is insignificant or negative in both the short- and long-term. Regression Discontinuity Design estimates also suggest that the impact of FTA on the export value of products at intensive margins depends on whether the FTA partners are emerging or developed markets.

Keywords: Free trade agreement; Intensive margins; Extensive margins; Difference-in-differences (search for similar items in EconPapers)
JEL-codes: F13 F14 F15 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s40812-024-00304-5

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