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Journal of Economic Integration 2004 December;19(4) :667-689.
DOI: https://doi.org/10.11130/jei.2004.19.4.667
Trade Blocks and the Gravity Model: Evidence from Latin American Countries

Carlos Carrillo-TudelaCarmen A Li 

University of Essex, UK
Copyright ©2004 Journal of Economic Integration
ABSTRACT

We apply the gravity model to examine the effects of the Andean Community and Mercosur on both intra-regional and intra-industrial trade in the period 19801997. After accounting for size distance and competitiveness effects, the Andean Community preferential trade agreements had a significant effect on the reference products but only a marginal effect on the differentiated products, in particular capital-intensive goods. Mercosur preferential trade agreements had a significant positive effect only on the capital-intensive subcategory of the reference products.

JEL Classifications: F14 and F15

Keywords: gravity model | bilateral trade | trade blocks | Andean Community and Mercosur
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