The Role of Preferential Trade Agreements (PTAs) in Facilitating Global Production Networks

Discussion Papers


by HAYAKAWA Kazunobu and YAMASHITA Nobuaki

February 2011


This paper examines the effects of preferential trade agreements (PTAs) in facilitating international trade flows connecting production networks. We consider over 250 PTAs with trade flows distinguished into parts and components and final goods for the period 1979-2008. The gravity equation estimates suggest that the concurrent year effects of PTA formation on trade in parts and components are unseen, whereas PTAs have positive and pervasive effects on both types of trade flows 6 and 9 years after the PTA formation.

Keywords: Preferential trade agreements, regional trade agreements expansion strategy of multinational enterprise, gravity equation
JEL classification: F15, F53

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