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Bilateral Import Protection, Free Trade Agreements, and Other Factors Influencing Trade Flows in Agriculture and Clothing
Author(s) -
Vollrath Thomas L.,
Gehlhar Mark J.,
Hallahan Charles B.
Publication year - 2009
Publication title -
journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.157
H-Index - 61
eISSN - 1477-9552
pISSN - 0021-857X
DOI - 10.1111/j.1477-9552.2008.00186.x
Subject(s) - clothing , trade barrier , agriculture , economics , international trade , bilateral trade , international economics , gravity model of trade , free trade , international free trade agreement , commercial policy , government (linguistics) , comparative advantage , economic integration , ecology , linguistics , philosophy , archaeology , biology , law , political science , china , history
Many factors shape the global network of bilateral trade including fundamental forces of supply and demand factors and government policies. This study uses the generalised gravity framework to distinguish among the different drivers that either deter or aid partner trade in land‐intensive agriculture and labour‐intensive clothing. The dataset used in the analysis includes bilateral trade among 70 countries in 1995, 2000 and 2005. Collectively, the 70 countries account for 85% of the world’s trade in agriculture and 96% of its GDP. Empirical results lend support to the Heckscher–Ohlin explanation of trade, namely that relative factor endowments motivate cross‐border trade. Results also show that tariffs are not always binding and bilateral free‐trade agreements more often divert rather than create trade.