A RE-EXAMINATION OF THE BENEFITS OF TRADE AGREEMENTS ON AGRICULTURAL EXPORTS AND THE IMPACT OF THE 2008 GREAT RECESSION

Abstract

This study provides an analysis of trade benefits of regional trade agreements on global agricultural trade flows. The impact of the 2008 Great Recession is examined. Trade creation and diversion effects are evaluated within the framework of dynamic gravity models. The generalized gravity equations and probit models that account for missing export values are estimated by methods that deal with various specification effects. The findings show that the system-GMM is the efficient estimator. The results reveal that the ASEAN, EAC, and EU associations were more effective in generating agricultural trade benefits for members than the rest of the associations. The NAFTA, MERCOSUR, and SADC associations generated little or no benefits for members. The advent of the 2008 Great Recession impaired agricultural trade flows. While the ASEAN, EAC, and EU associations sustained net trade creation during the entire period and sub-periods, all benefits declined uniformly following the 2008 Great Recession.

Keywords

• 2008 great recession
• global agricultural trade
• gravity equation
• panel data
• trade benefits