Heterogeneous Effects Of Economic Integration Agreements
Mulabdic, A, A Osnago and M Ruta (2017), “Deep integration and UK-EU trade relations”, World Bank Policy Research Research Working Paper 7947 It is now widely accepted that economic integration agreements and other trade liberalizations contribute to the economic growth and development of nations. The AES multiplied between the north-north (N-N), north-south (N-S) and south-south (S-S) country pairs. While such agreements inevitably alter the distribution of income within countries, it is assumed that EIA will largely increase economic well-being. The evolution of “new quantitative trade models” is an important novelty in the international trade literature, which is based on the theoretical evolution of the hegemonicity of enterprises and the costs of fixing exports.  These models provide calculations of the general equilibrium and welfare effects of trade liberalizations using exogenous “trade elasticities” (variable costs) estimated from structural equations of gravity combined with aggregated bilateral trade data. In addition, estimates of the welfare effects of EIA may be calculated as soon as a partial treatment effect comes from a duly specified gravity equation with EIA-Dummy variables and from an exogenous commercial elasticity value (parameter value).  The general effects of protecting the equilibrium of an EIA can be explained by partial effects. To re-require these questions, we provided three contributions. First, we have expanded a standard Melitz business model to theoretically show how extensive and intensive margin and exchange elasticities are endogenous to achieve bilateral and fixed trade costs, theoretical political and non-political, even with CES preferences and a mensongiable distribution of pareto productivity.  Among several theoretical results, we find three. While the elasticity of intense duty margins responds only to the relative levels of variable costs of political and non-political negotiation, the elasticity of large margins is also sensitive to the relative importance of endogenous bilateral fixing costs for export (via network effects) in overall bilateral fixing costs for export.
While the elasticity of the intense fixed cost margins of political exports is zero, the high elasticity of the fixed cost margins of political exports is sensitive to the relative importance of endogenous bilateral export fixing costs for all bilateral export fixing costs and to the relative importance of exogenous fixed costs for the export of exogenous non-political exports. Theoretical comparative statistics provide many predictions on how proxies for natural variable (exogenous) trade costs and political and non-political fixing costs for exports influence the expected partial effects of EIA on intense margins, large margins and bilateral trade. This can be intuitively explained by the need for reciprocal trade in intermediate products in a timely manner to enable local supply and production networks to operate efficiently. Punctuality, while still important, is less important for finished products, as consumers are more likely to wait longer for the best products they can afford. In addition, trade agreements are expected to further strengthen trade in intermediate products than other types of goods, due to their contribution to network and connectivity effects, including promoting reciprocal trade. The number of trade agreements in force has increased significantly in recent decades. Since the conclusion of the Uruguay Round in 1994, more than 250 agreements have been signed. While early trade deals were made mostly between neighboring countries or regional blocs, most extra-regional trade deals have only come into play since the mid-2000s. . .