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The Growth Lab Research Seminar series is a weekly seminar that brings together researchers from across the academic spectrum who share an interest in growth and development.
Speaker: Dr. Raymond Robertson, Director of the Mosbacher Institute for Trade, Economics, and Public Policy, Professor, and Helen and Roy Ryu Chair in Economics and Government, the Bush School of Government and Public Service, Texas A&M
Abstract: In this paper, we revisit and assess the heterogeneous effects of RTAs on trade flows. Using the Poisson Pseudo maximum likelihood (PPML) estimator with high-dimensional fixed effects, we account for multiple characteristics of the trading partners, including their membership in other RTAs, and the problem of incidental parameters. Our main focus is on apparel trade, which is politically sensitive and tends to have heterogeneous Rules of Origin (ROOs) within RTAs. Studies show that ROOs can restrict trade if they are either complicated or narrowly specified (Cadot and de Melo 2007, Angeli et al. 2020) and we show that the variance of the estimated effect of RTAs on apparel trade is significantly higher than the variance for total trade. In addition to contributing to trade agreement heterogeneity, apparel also plays a pivotal role in economic development and reducing emigration by drawing workers from agriculture and informality because apparel production has lower start-up costs and pays higher wages than other domestic alternatives for similar workers (Robertson et al. 2020 and 2022). Together our results suggest that understanding trade agreement heterogeneity, especially in the apparel sector, can have significant policy implications. Focusing on the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR), for example, suggests that updating ROOs could significantly reduce migration from Central America.
Please register in advance.
About the speaker:
Dr. Raymond Robertson is Professor and holder of the Helen and Roy Ryu Chair in Economics and Government in the Departments of International Affairs at the Bush School of Government and Public Service and the Director of the Mosbacher Institute for Trade, Economics, and Public Policy. He is a research fellow at the Institute for the Study of Labor in Bonn, Germany, and a senior research fellow at the Mission Foods Texas-Mexico Center. He was named a 2018 Presidential Impact Fellow by Texas A&M University. Robertson earned a BA in political science and economics from Trinity University in San Antonio, Texas, and an MS and PhD in economics from the University of Texas at Austin. He has taught at the Maxwell School of Citizenship and Public Affairs at Syracuse University and was a Visiting Professor in the Department of Economics at the Graduate School of Administration, Monterrey Institute of Technology’s Mexico City campus. Widely published in the field of labor economics and international economics, Robertson previously chaired the US Department of Labor’s National Advisory Committee for Labor Provisions of the US Free Trade Agreements and served on both the State Department's Advisory Committee on International Economic Policy and the Center for Global Development’s advisory board.