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Upgrading of Exports: Does the Integration into Trade Agreements Pave the Way to Product Upgrading?

Author

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  • Katharina Längle

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, UP1 - Université Paris 1 Panthéon-Sorbonne, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

Abstract
This paper investigates whether trade agreements help middle income countries to upgrade their product portfolio exported to high income countries. Combining product level trade flows from the CEPII-Baci database with information on product complexity from the Atlas of Economic Complexity and the DESTA database on trade agreements, this question is studied for a set of 135 countries between 2001 and 2013 based on a gravity framework. In this context, the development of the extensive and intensive margins for high complex products is considered as proxy for product upgrading. By exploiting the cross sectional dimension of the panel, this study finds that middle income countries export a wider product scope of complex goods if their trade relation is covered by an agreement including trade provisions related to competition, services and investments, compared to country pairs without an equivalent framework. Still, the consideration of the time dimension leads to ambiguous effect of these provisions. While positive estimation results for the intensive margin of complex goods are in line with related papers, negative effects on the extensive margin of complex goods are at odds with expectations of the mechanism between agreements and trade.

Suggested Citation

  • Katharina Längle, 2020. "Upgrading of Exports: Does the Integration into Trade Agreements Pave the Way to Product Upgrading?," Post-Print halshs-02899973, HAL.
    • Handle: RePEc:hal:journl:halshs-02899973
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-02899973
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    References listed on IDEAS

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    Keywords

    Empirical Studies of Trade; Economic Complexity; Trade Integration;
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