Abstract
A plethora of empirical research studies have unveiled the determinants of bilateral flows. However, little is known about their net effect on 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 to 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 with the rise in income of Tunisia and its trading partners. In addition, the European Union agreement is the only FTA that has had beneficial effects on trade balance in manufactured sectors. The PAFTA has had also some positive effects on trade balance, but only in the agricultural sector. The free trade agreement signed with Turkey as well as the PAFTA and the AGADIR agreements has significantly contributed to an excess of Tunisia’s trade deficit in manufactured sector.
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Article Details
- Year: 2022
- Volume: 43
- Issue: 4
- Pages: 131 - 162
- Accepted: 07.11.2022
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DOI:
https://doi.org/10.5281/zenodo.16895193 -
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How to Cite?
Makrem Ben Doudou (2022). The Effect of Free Trade Agreements on Tunisia’s Trade Balance: A gravity Model Approach. Journal of Economic Cooperation and Development, 43(4), 131-162. https://doi.org/10.5281/zenodo.16895193
