Role of Trade Agreements and Enabling Trade Indexes on Trade Creation or Trade Diversion of US state Corn, Soybeans and Wheat

The dynamics of international trade among countries have been widely studied. The use of the traditional gravity model has been conspicuous in this area since its first related use by Tinbergen. There have been several variations of the model by economists in an attempt to understand the factors influencing international trade. One area that has sparsely been exploited is the dynamics of trade between individual regions of a country and the country’s trade partners. With the recently derived Enabling Trade Index(ETI) by the World Trade Forum, this paper employs the components of the sub-indexes and pillars of the ETI in a traditional gravity model to explain the dynamics of three agricultural crop exports of the 48 contiguous US states. It is realised from the Tobit regression of the gravity model that the sub-indexes such market access, border administration, infrastructure and operating environment are sufficiently able to explain changes in state exports of corn, wheat and soybean. Likewise, the pillars are also able to explain the responses of these three state agricultural exports to relative changes among partners.

Issue Date:
Jan 18 2017
Publication Type:
Conference Paper/ Presentation
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 Record created 2017-04-01, last modified 2018-01-23

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