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

Arbeitspapier

Overlapping free trade agreements (FTAs) have given rise to hub-and-spoke FTAs that may promote trade by giving an export advantage to the FTA hub country. We empirically investigate the effect of hub-and-spoke FTAs on trade using panel data consisting of 99 countries and covering the period 1960–1999. Our empirical analysis of the panel data yields three notable findings. First, FTAs have a significant and positive impact on trade. Second, hub-and-spoke FTAs increase trade above and beyond FTAs, and thus reinforce the trade-boosting effects of FTAs. Third, our results imply an annual growth rate of 4.9% in bilateral trade and hence a doubling of trade after 14½ years between FTA partners. Our results indicate that the hub-and-spoke nature of FTAs has a positive effect on trade, in addition to the direct, trade-liberalizing effect of FTAs. Therefore, in a world of overlapping FTAs, a more accurate empirical analysis of the relationship between FTAs and trade calls for taking into account the hub-and-spoke characteristic of FTAs.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ADB Economics Working Paper Series ; No. 127

Classification and Topics

• Classification: Wirtschaft
• Subject: Freihandelszone ; Internationale Wirtschaft

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Alba, Joseph D. ; Hur, Jung ; Park, Donghyun
• Event: Veröffentlichung
• (who): Asian Development Bank (ADB)
• (where): Manila
• (when): 2008

Further information

• Handle: http://hdl.handle.net/10419/109332
• Last update: 10.03.2025, 11:44 AM CET