The direct and indirect effects of preferential trade agreements.

01 November 2020 → Ongoing
Research Foundation - Flanders (FWO)
Research disciplines
  • Social sciences
    • International economics
structural gravity impact on bilateral trade flows bilateral FDI-flows. bilateral migration flows Preferential trade agreements
Project description

The formation of preferential trade agreements (PTAs) experienced an enormous growth in the last decades. Starting from an average of three PTAs in 1990, every member of the WTO is now part of an average of 10 PTAs. Trade agreements have thus undeniably become an important feature of globalization. More importantly, recent data show that the institutional content of the PTAs has experienced an evolution that goes beyond the traditional trade policy. Currently, more than half of all PTAs include provisions on labor or investments. In this research we estimate the direct (on trade) and indirect (on migration and foreign direct investments) effects of PTAs. Research so far estimated either the impact on trade flows, or investment flows, or migration flows separately. By using this approach, the existing literature risks omitting the important role provided by a broad and deep institutional framework of some PTAs. We aim to fill this gap by estimating the impact of PTAs in a simultaneous system of seemingly unrelated structural gravity equations. We also extend the recent studies on the content of PTAs to study the content and the heterogeneity of bilateral labor agreements (BLAs) and bilateral investment treaties (BITs). Third, this project contributes to the field by identifying the underlying mechanisms of the direct and indirect effects of PTAs due to the profound analysis of the contents of the international agreements (PTAs, BLAs, BITs).