This paper evaluates agricultural trade creation and diversion effects of the most important free trade agreements (FTAs). Trade creation and diversion effects are estimated using a Poisson Pseudo‐Maximum‐Likelihood (PPML) estimator with various fixed effects to deal with heteroskedasticity and zero trade observations. The analysis finds that PPML estimation is preferred to OLS and the estimated impacts of FTAs are different if zero trade observations are considered. The ASEAN‐China preferential trade agreement, EU‐15, EU‐25, and Southern African Development Community agreements have generated large increases in agricultural trade among their members.

We present in this paper a new method of estimating total factor productivity (TFP) and capital stocks simultaneously, and apply it to growth accounting in the Chinese economy at the national, regional, and provincial levels. Since our treatment of capital and labour does not allow for quality our TFP growth or residual also includes quality improvement of capital and labour, so that our findings can be summarized as follows. The rapid growth in China in the fifteen years since the Reform and Open-up Policy is mainly due to the high and stable level of capital input, which contributes around 50% of GDP growth. The contribution of labour is small at around 15% of GDP growth and has been declining steadily. The growth of TFP has been fairly high at around 3~4% and is tending to increase and contributes about 40% to GDP growth. The economic growth of regions and provinces in China also depends heavily on capital input. The higher growth in the East region is attributed also to the higher input of capital in the region compared with the Middle and West regions. The gap in GDP growth between the East and the other two regions, has widened recently during the period of the 8 th five-year plan. This is partly due to additional promotion of capital input in the East region, but is mainly because TFP growth has accelerated for more quickly in the East than in the other two regions. There has also been a remarkable widening of the gap in per capita GDP, especially in the 1990s. The difference in income within rural households, especially between the West and the other two regions, is a crucial factor in explaining this regional income disparity. The level of TFP, together with the level of capital, is also important in explaining the income disparity in China between regions and provinces. The growth of TFP in each province in the 1990s is closely related to such common factors as the * This paper arises from a project supported by ICSEAD (International Center for the Study of East Asian Development) for the 1997 fiscal year. The authors are very grateful to an anonymous referee for many useful comments on the original draft. Any remaining errors, however, are their responsibility. ASIAN ECONOMIC JOURNAL40 expansion of non-state enterprises, the increase in foreign direct investment and, to a lesser extent, the degree of human development, but it is still greatly dependent on the region-specific elements.

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