Effects of Hub-and-Spoke Free Trade Agreements on Trade: A Panel Data Analysis

Abstract

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Can Trade Agreements Curtail Trade Creation and Prevent Trade Diversion?

“…However, unlike our studies, Egger and Larch (2008), Chen and Joshi (2010), Baier et al (2011) and Baldwin and Jaimovich (2012) focus on the propensity of PTA formation rather than the cross effects between PTAs on trade flows. Lee et al (2008), Hur et al (2010) and Deltas et al (2012) are closer to our study in that they study the cross PTA effects on trade flows, but they either omit trade diversion and its associated cross PTA effects, or do not account for important PTA characteristics that can cause estimation bias. Deltas et al (2012) examine trade flows of PTA member countries under the hub and spoke system; however, their analysis focuses solely on Israel, while ours covers more than 160 countries and is therefore much more comprehensive.…”

Overlapping free trade agreements and international trade: A network approach

“…Deltas, Desmet, and Facchini (), developing a simple model of comparative advantage, conclude that due to the decrease in trade among the two spokes, the hub will increase trade with both the spokes. For concerns related to empirical studies, the main contributions are from De Benedictis, De Santis, and Vicarelli (), who analysed the effects of the east enlargement of the EU in a gravity model; Deltas, Desmet, and Facchini (), on the hub‐and‐spoke system formed by Israel, the US and Europe; Hur, Alba, and Park () and Lee, Park, and Shin (), who use a panel of bilateral trade from 1960 to 1999 to investigate the average effect of being a hub in bilateral trade between the countries. These studies consider the hub‐and‐spoke characteristics in a three‐country setting, where the effects of the hub on bilateral trade are determined by a dichotomic variable related to whether the country is a hub or not a hub, finding mixing evidence.…”

Economic Comparison of Agricultural Sector of Eurasian Countries – Is There Any Potential for Development Through Economic Cooperation?

“…This is derived from the fact that, provided that the economic structure of agriculture in these countries is similar, they are likely to converge. Nevertheless, this similarity might be apparent between some countries only and the so called sub-clubs (King, 2016b;King, 2016a) or the hub-and-spoke principle might be created (Chong and Hur, 2008;Hur et al, 2010;Kirkow, 1999). The aim of the paper is to analyse the similarities of the agricultural between postSoviet countries and to find the relation between agriculture index and GDP per capita for these countries.…”