Master of Science (MS)
This study examines the impacts RTAs have had in the Asia-Pacific region regarding agricultural trade flows in order to make a prediction on how the proposed TPP agreement will affect the region. The estimation was carried out using a Gravity Model framework to observe the trade creation and trade diversion effects of five existing RTAs in the Asia-Pacific region. These agreements include NAFTA, AFTA, MERCOSUR, APEC, and CER. It is expected that RTAs were to have a positive effect for trade creation and a negative trade diversion effect. The gravity model included export flows of agricultural commodities (defined as food and live animals) between countries in the Asia- Pacific region to one another as the dependent variable. The right hand side of the equation included the traditional variables in a gravity model: GDP of exporter (importer), population of exporter (importer), and the distance between exporter and importer. It also consisted of additional variables to capture trade effects due to exchange rates, common language between trading partners, shared border, whether a country is landlocked, and mutual membership in a RTA as our independent variables. Of the five agreements examined AFTA, CER, and MERCOSUR resulted in significant trade creation effects while APEC and NAFTA showed signs of possible trade diversion. It was also concluded that GDP and population had the expected positive signs and that distance also had the expected sign (negative). Also, sharing a common border or language did have an effect on bilateral trade. These results suggest that the TPP should expect a trade creation effect with possible trade diversion effects as well.
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Worley, Chloe Michelle, "Potential Impacts of the TPP on Agricultural Trade in the Asia-Pacific Region Utilizing a Gravity Model Framework" (2016). LSU Master's Theses. 2270.