Preferential trading agreements and the gravity model in presence of zero and missing trade flows: Early results for China and India

Rahul Sen, Sadhana Srivastava and Don Webber

No 2015-02, Working Papers from Auckland University of Technology, Department of Economics

Abstract: The two most populous countries of the world have embarked upon an extensive array of preferential trading agreements in recent decades. This paper specifically investigates the impacts on trade creation and trade diversion of China’s and India’s 11 major preferential trade agreements using an augmented gravity model that takes into account zero and missing trade flows in the data, employing a Zero Inflated Negative Binomial (ZINB) regression model as suggested in the recent literature by Burger et.al (2009) and Kohl (2012). The early results for the ZINB model, provided only for India and China as the home country, confirms that Chinese exports and imports were more likely to be net trade creating in presence of PTAs while India’s exports were more likely to be net trade diverting in the presence of the same PTAs, with imports having an insignificant effect. For India and China so far, most ASEAN+6 PTAs seems to have created both intra-bloc and extra-bloc trade. APTA is observed to be the only significant export creating PTA for India, while APTA and ACFTA are both found to be export creating for China.

Keywords: Trade creation; Trade diversion; Distance; Trade agreements (search for similar items in EconPapers)
JEL-codes: F14 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2015-02
New Economics Papers: this item is included in nep-cna, nep-int and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.aut.ac.nz/__data/assets/pdf_file/0019/ ... omics-WP-2015-02.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aut:wpaper:201502

Access Statistics for this paper

More papers in Working Papers from Auckland University of Technology, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Gail Pacheco (gail.pacheco@aut.ac.nz).