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The importance of deep integration in preferential trade agreements: the case of a successfully implemented Ukraine–Turkey free trade agreement
Review of World Economics ( IF 1.681 ) Pub Date : 2022-04-07 , DOI: 10.1007/s10290-022-00462-5
Veronika Movchan 1 , Thomas F. Rutherford 2 , David G. Tarr 3 , Hidemichi Yonezawa 4
Affiliation  

We construct a 45-sector model of Ukraine with Turkey and seven other regions to estimate the impacts on Ukraine of effectively implementing the deep Free Trade Agreement (FTA) it concluded with Turkey on February 3, 2022. Econometric evidence shows that the impacts of Preferential Trade Agreements (PTAs) are much greater than can be explained by tariffs alone. Consequently, we include deep integration in our model, which includes reduction of: (i) Barriers against suppliers of business services including by FDI; (ii) Non-tariff barriers in goods; and (iii) Time-in-trade costs. We innovatively estimate the ad valorem equivalents of the three types of deep integration instruments; and we construct an updated and disaggregated input–output table of Ukraine. Our central model contains foreign direct investment (FDI) in business services with endogenous productivity effects from additional varieties of goods or services in imperfectly competitive sectors. We estimate that a successfully implemented FTA will increase welfare in Ukraine by 2.72 percent, with the deep integration aspects responsible for about 56 percent of the gains; but preferential tariff reduction alone by Ukraine contributes almost nothing. The deep integration and imperfect competition features produce estimated gains 3.5 times larger than a model of perfect competition limited to tariff elimination. Permanent exclusion or very limited access in sensitive sectors, however, reduce the estimated welfare gains to 1.51 percent. Reduction of non-discriminatory barriers against both FDI and Ukrainian investment in business services would add an additional 2.0 percent of real household income to the estimated gains.



中文翻译:

优惠贸易协定中深度融合的重要性:成功实施乌克兰-土耳其自由贸易协定的案例

我们与土耳其和其他七个地区构建了一个 45 部门的乌克兰模型,以估计有效执行其于 2022 年 2 月 3 日与土耳其签订的深度自由贸易协定 (FTA) 对乌克兰的影响。计量经济学证据表明,优惠政策的影响贸易协定 (PTA) 远远超出关税本身所能解释的范围。因此,我们将深度整合纳入我们的模型,其中包括减少: (i) 包括 FDI 在内的商业服务供应商面临的障碍;(ii) 商品中的非关税壁垒;(iii) 交易时间成本。我们创新地估算了三种深度集成工具的从价当量;我们构建了一个更新和分解的乌克兰投入产出表。我们的中心模型包含商业服务中的外国直接投资 (FDI),这些服务具有来自不完全竞争部门的额外商品或服务种类的内生生产力影响。我们估计,成功实施的 FTA 将使乌克兰的福利增加 2.72%,其中 56% 的收益来自深度融合方面;但仅靠乌克兰的优惠关税削减几乎没有任何作用。深度整合和不完全竞争的特征产生的估计收益是仅限于关税消除的完全竞争模型的 3.5 倍。然而,敏感部门的永久排斥或非常有限的准入将估计的福利收益降低到 1.51%。

更新日期:2022-04-07
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