Is the effect of the economic integration on trade margins time sensitive? Sectoral evidence from Latin America

Abstract

The present paper follows the methodology of Baier et al (2011) and Hummels and Klenow (2005) to determine the effects of different levels of EIAs (non-reciprocal PTA, PTA, FTA and customs unions) on the intensive and the extensive margins of trade. It uses a gravity equation for the exports of eleven countries of the Latin American Integration Association (LAIA) to 161 partners over the period 1962-2009. The long time period considered will allow us to determine whether different effects on trade margins might arise on the following two sub-periods: 1962-1989 and from 1989 onwards (before and after the proliferation of regional integration agreements and the deepening of the liberalization process in the region). Finally, we focus on those specific sectors in which Latin American countries present a higher relative participation.