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Literature is full of studies on the relationship between trade and investment. Since trade agreements have the potential of altering this relationship, this study employed gravity model analysis to determine how NAFTA might have affected trade and investment among member countries. Overall improvement in NAFTA economy enhanced exports in the regio...
Contexts in source publication
Context 1
... is the largest free trade region in the world and accounts for about $17 trillion worth of traded goods and services (USTR.GOV). Soon after the advent of NAFTA, tariffs on many imports were eliminated (Figure 1). As of 2008, the region remains tariff free and seeks to eliminate non-tariff barriers as well (commerce.gov). ...
Context 2
... is placed on plots with conspicuous changes. Figure 1 shows the responsiveness of exports to FDI. While the responsiveness was falling before the advent of NAFA, it flattened after NAFTA. Figure 2 shows that the responsiveness of exports to exchange rate changes is weakening over time. ...
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Citations
... [4] showed that economic freedom does not always have the expected impact on international trade. [5] indicated that the North American Free Trade Agreement (NAFTA) promoted exports. [6] showed that the RTA threatens the trading system and brings discriminatory practices. ...
Whether or not the World Trade Organization (WTO) has promoted international trade is under dispute. This article uses a revised traditional gravity model to conduct empirical examination of this problem and found that WTO has recently promoted international trade and that the degree of increase is larger in developed countries than in developing ones. Moreover, regional trade agreements (RTA), currency unions, GDP, and distance are related to the increase of international trade along with the effects of WTO activities. On the other hand, the effect of distance on international trade has been decreasing. Improvements in information technology (IT) may have influenced this finding.
