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- Title
The Effect of Free Trade Agreements on Tunisia's Trade Balance: A gravity Model Approach.
- Authors
Ben Doudou, Makrem
- Abstract
A plethora of empirical research studies have unveiled the determinants of bilateral flows. However, little is known about their net effect on the trade balance. In this paper, we aim to examine the role of free trade agreements in the widening of Tunisia's trade deficit in recent years. Our estimations are based on aggregated and disaggregated data for Tunisia and its 164 trading partners over the 1995-2019 period. Using static and dynamic versions of the gravitational equation along with the Poisson Pseudo Maximum Likelihood technique, we find that Tunisia's trade flows increase as Tunisia's and its trading partners' income rises. In addition, the EU agreement is the only FTA that has had beneficial effects on the trade balance in the manufactured sector. The PAFTA has also had some positive effects on the trade balance, but only in the agricultural sector. The free trade agreement signed with Turkey as well as the PAFTA and AGADIR agreements have significantly contributed to an excess of Tunisia's trade deficit in the manufactured sector.
- Subjects
TUNISIA; COMMERCIAL treaties; GRAVIMETERS (Geophysical instruments); GRAVITY model (Social sciences); INTERNATIONAL trade; BALANCE of trade; ARAB Spring Uprisings, 2010-2012; FREE trade
- Publication
Journal of Economic Cooperation & Development, 2022, Vol 43, Issue 4, p11
- ISSN
1308-7800
- Publication type
Article