Analysis on the subscription of the customs union of the Andean Community: Trade creation and trade diversion (1967-2017)
DOI:
https://doi.org/10.35319/lajed.202034428Keywords:
Regional trade agreement, Andean Community, intra-regional trade, extra-regional trade, structural gravity model of trade, Poisson Pseudo Maximum LikelihoodAbstract
This paper seeks to determine whether the signing of the CAN customs union in 1995 gave rise to a process of creation/diversion of intra-regional and extra-regional trade for its members. For this reason, estimates of the structural gravity trade model are developed, with panel data from 83 countries, which includes the period 1967-2017, with a disaggregation of twelve types of goods production chains, using the estimation method “Poisson Pseudo Maximum Likelihood”. Estimates suggest that signing the CAN customs union leads to a process of intraregional trade creation and the creation of imports from non-member countries. Among other results, the signing of this customs union increases intra-regional trade in the following productive chains of goods: paper and wood, steel and iron, non-ferrous metals and electronics. Also, it is identified that the groups of productive chains of energy, chemicals, vehicles and electric, a process of creation of exports to non-member countries is generated.
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