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ble indicated the geographical distance between the largest cities of the countries involved in free trade agreements reflecting the intangible and tangible trade costs. The results were expected to be negative with a longer distance as the cost increased with distance (Braga and Mendez, 1983). Language and adjacency were the dummy variables that indicated trade costs such as transportation cost as well as cultural similarity. The adjacency variable indicated the value of unity of countries sharing a common border while language variable indicated the value of unity if common official languages shared among the involved countries. The binary variable FTA was important in capturing “the general FTA effect on trade flows.” The variables were constructed based on 22 regional trade agreements as well as 86 bilateral trade agreements up to 2006 (Chen and Tsai, 2005). The nested dummy variable is Timedum was used for capturing the external annual time effect at the period.
The data was collected through primary as well as secondary sources. Primary data was collected by the help of observations and by conducting interviews; whereas the secondary data was collected from scholarly sources. The sample for estimation of the information includes 178 countries between the period of 1985 to 2005. For the study, the sample was constructed through expansion of the dataset as constructed by Rose (2005). The bilateral trade values, GDP per capital, distance, GDP, language and adjacency variables from the data were set and were expand using the International Financial statistics of IMF (international monetary fund) and the Direction of Trade Statistics. The trade data was taken from the Direction of Trade Statistics (DOT). The dummy variables, i.e., distance, language, Adjacency are kept constant for the study.
In the estimation method, a structural change test was first conducted because the sample had a long time series dimension. The cumulative sum of recursive residual
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The exchanging process includes purchasing and selling of products or services that are conducted among various trading partners across different countries. According to the modern definition, the international trade refers to an increasing competition along with more spirited pricing within the international market.
It is important to state that no country is self sufficient and therefore there is always need to import goods and services that are scarce and to export those that are in abundance. This becomes difficult without FTAs and the contemporary society has continued to embrace this important development.
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s true for nation-states, who seek to be part of and attain the high progress and industrialization sweeping across capitalist countries located mostly in North America and Europe. International trade is an acknowledgement that interdependence is now a worldwide reality, though
Colombia is a South American nation with a population of around 46.24 million as on July 2014, as per the latest recorded estimated data (CIA, “Colombia”). The poverty rate in the country has also been high owing to violence along with conflicts that lasted for around five decades in the recent past.
Before conducting the research, the articles related to free trade agreements, trading zones, theories of international businesses and the inferences of free trade on business will be studied. The research
By 2008, the countries had established a common market. The GCC trade agreement of 2001 among member countries lays a strong foundation for the relationship among member countries, and has a significant role in the economy of each country.
reements across the globe, TPP is of much interest because of its coverage as well as due to the presence of the United States of America as a partner during negotiations. The other reason is that as a trade agreement, it will overlap many other free trade agreements thus its
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