Research
Publications
Third-Country Effects of Regional Trade Agreements: A firm-level analysis (with Alen Mulabdic and Michele Ruta) -- Journal of International Economics, Volume 140 (2023)
How do regional trade agreements impact exporters in non-member countries? We revisit this long-standing trade policy question using firm-level data from Costa Rica and detailed information on the content of trade agreements. Differently from the conventional view on trade diversion, the analysis shows that “deep” regional trade agreements can have a positive spillover effect: they increase the probability of export and entry of third-country firms that previously exported to one of the member countries. This spillover effect is driven by provisions that are nondiscriminatory and address regulatory issues, as they make member countries more “similar”, thus allowing to reduce entry costs. Indeed, firms exporting regulation-intensive products benefit disproportionately more from deep trade agreements in destination markets.
Trade Facilitation Provisions in Deep Trade Agreements: Impact on Peru's Exporters (with Nadia Rocha and Michele Ruta) -- in CEPR-World Bank eBook The Economics of Deep Trade Agreements, edited by A. Fernandes, N. Rocha, and M. Ruta, 2021. Centre for Economic Policy Research and World Bank.
Trade facilitation measures that simplify, modernize, and harmonize export and import processes are particularly important in a world of global value chains where goods cross borders multiple times. At the firm level, trade facilitation commitments in preferential trade agreements can generate larger gains for firms participating in global value chains, as these firms can benefit both from efficiency enhancement at their own border (when importing inputs) and at the partner countries’ borders (when exporting). This paper uses Peruvian customs data to investigate the heterogeneous impact of trade facilitation provisions across firms, depending on their global value chain linkages. The results show that trade facilitation provisions in preferential trade agreements promote the export performance of global value chain firms, especially when they import inputs from the preferential trade agreement partner country. In the case of Peru, the main benefit of trade facilitation provisions results from efficiency enhancements at its own border, allowing global value chain firms to import inputs in a more timely and predictable manner.
Services Liberalization and GVC Participation: New Evidence for Heterogeneous Effects by Income Level and Provisions -- Review of International Economics, Volume 27, Issue 3 (2019)
Participation in global value chains (GVCs) is a key element in the industrialization strategies of many developing nations. This paper investigates the role of services liberalization in promoting participation in GVCs. Using the gravity framework, I examine the impact of services trade agreements on gross trade and GVC-trade (backward and forward participation) in goods. I find that services trade agreements promote both, but especially GVC-trade, although the effects are heterogeneous: the impact is bigger for developing nation exporters. Moreover, services agreements that allow the export of services without local presence (non-establishment rights) are particularly important in fostering GVC participation.
Working Papers and Work in Progress
Distance, Formal and Informal Institutions in International Trade (with Rainer Lanz and Victor Stolzenburg) -- WTO Working Paper ERSD-2019-03
This paper brings together three strands of literature on the determinants of international trade – distance, formal, and informal institutions – to explain differences in export performance across countries. Using an augmented gravity model, we find that the importance of formal institutions (rule of law) for bilateral trade increases with distance. Similarly, the pro-trade effect of informal institutions (migrant networks) is larger for distant countries. After confirming that informal institutions can substitute for weak formal institutions in promoting trade, we finally show that this substitution effect does not decrease with distance. Our findings contribute to explaining the persistent negative effect of distance on the export performance of many developing countries despite reductions in trade costs, and provide guidance to policy makers in terms of trade reform, regional trade liberalization and export promotions strategies.