By Mireya Solís, Barbara Stallings, Saori N. Katada (eds.)
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Extra resources for Competitive Regionalism: FTA Diffusion in the Pacific Rim
If they are substitutes, existing spoke countries may be harmed by an erosion of their degree of preference in the hub market. 4 Therefore, the hub-and-spoke dynamics create incentives for countries to become an FTA hub in order to ensure positive gains. In addition to its impacts on trade, an FTA also affects other foreign economic activities such as FDI. As the FTA eliminates regional trade barriers and expands market size, FDI is likely to flow into the regional market in the expectation of selling more products.
The export profile of each country is first estimated through a weighted sum of each of its trading partner’s export share multiplied by that partner’s share of world imports. 2. Next, the export profiles of pairs of countries are compared as a simple ratio. The higher the ratio, the more similar is their distribution of exports by market of destination. Source: IMF, Direction of Trade Yearbook. R. R. 2 Mireya Solís and Saori N. Katada 17 18 Explaining FTA Proliferation as Thailand with both Singapore and Indonesia.
Combining these two effects, one finds that additional net gain (benefits–costs) for a new FTA Shujiro Urata 33 increases. This finding may be interpreted as the ‘domino effect’ discussed by Baldwin (1995). Endoh’s empirical analysis of 118 countries for the year 2002 confirmed all the expected relationships discussed above. It is particularly noteworthy that Endoh corroborates that the greater the number of FTAs established by a country in question, the more likely it is for that country to have another FTA.
Competitive Regionalism: FTA Diffusion in the Pacific Rim by Mireya Solís, Barbara Stallings, Saori N. Katada (eds.)