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Impact of the international trade agreements between EU and African countries
Název práce v češtině: Dopady obchodních dohod mezi EU a africkými zeměmi
Název v anglickém jazyce: Impact of the international trade agreements between EU and African countries
Klíčová slova: obchod, celní unie, dohoda o volném obchodu, gravitační model, Afrika, EU
Klíčová slova anglicky: trade, customs union, FTA, gravity mode, Africa, EU
Akademický rok vypsání: 2021/2022
Typ práce: bakalářská práce
Jazyk práce: angličtina
Ústav: Institut ekonomických studií (23-IES)
Vedoucí / školitel: Ing. Vilém Semerák, M.A., Ph.D.
Řešitel: skrytý - zadáno vedoucím/školitelem
Datum přihlášení: 30.06.2022
Datum zadání: 30.06.2022
Datum a čas obhajoby: 13.06.2023 09:00
Místo konání obhajoby: Opletalova, O206, místnost. č. 206
Datum odevzdání elektronické podoby:03.05.2023
Datum proběhlé obhajoby: 13.06.2023
Oponenti: Jan Mošovský, M.Sc.
 
 
 
Seznam odborné literatury
Baier, Scott L., and Jeffrey H. Bergstrand. ‘Do Free Trade Agreements Actually Increase Members’ International Trade?’ Journal of International Economics 71, no. 1 (8 March 2007): 72–95.

Carbone, Maurizio. ‘Caught between the ACP and the AU: Africa’s Relations with the European Union in a Post-Cotonou Agreement Context’. South African Journal of International Affairs, 20 December 2018.

Bacchetta, Marc, Cosimo Beverelli, Olivier Cadot, Marco Fugazza, J-M. Grether, Matthias Helble, Alessandro Nicita, and Roberta Piermartini. A practical guide to trade policy analysis. Geneva, CH: World Trade Organization, 2012.

Cardamone, Paola, ed. A Survey of the Assessments of the Effectiveness of Preferential Trade Agreements Using Gravity Models. TRADEAG Working Papers, 2007.

Yotov, Yoto V., Roberta Piermartini, José-Antonio Monteiro, and Mario Larch. An Advanced Guide to Trade Policy Analysis: The Structural Gravity Model. WTO, 2016.

Nguyen, Cuong Viet. ‘The Impact of Trade Facilitation on Poverty and Inequality: Evidence from Low- and Middle-Income Countries’. Journal of International Trade and Economic Development 24, no. 3–4 (April 2015): 315–40.

Balachandran, Gopalan. ‘Trade Liberalization and Poverty: A Handbook by Neil McCulloch, L. Alan Winters, and Xavier Cirera UK Department for International Development and the Centre for Economic Policy Research, London, 2001, 405 Pp.’ World Trade Review 1, no. 2 (July 2002): 223–31.

Dixit, Avinash, and Victor Norman. Theory of International Trade: A Dual, General Equilibrium Approach. Cambridge Economic Handbooks. Cambridge: Cambridge University Press, 1980.

Viner, Jacob. ‘The Customs Union Issue. By Jacob Viner. (New York: Carnegie Endowment for International Peace. 1950. Pp. Viii, 221. $2.50.)’. The American Political Science Review 44, no. 4 (1950): 1055–1055.
Předběžná náplň práce v anglickém jazyce
Research question and motivation

In my thesis, I intend to analyze the impact of international trade agreements between the EU and African states on bilateral trade flows with a focus on particular regions in Africa.

Poverty and inequality seem to be highly important economic issues, among other branches, which are aimed to be reduced across the whole world. According to the WTO, the values of world trade have increased by nearly 274 times compared to 1950 levels, raising a question of how trade influences these variables. Balachandran (2002), Winters, McCulloch, and McKay (2004), and Schaffner (2010) suggest that an increase in trade between two countries positively affects poverty reduction and employment. Furthermore, the facilitation of international trade seems to significantly improve GDP, and inequality, and reduce the poverty rate in a country (Nguyen 2015). Concerning the African states struggling with the living conditions of the poorest social class, Ravallion (2004) and Dollar and Kraay (2002) show that the growth is expected to improve the situation of the poor almost equally as to the rich people. It seems, therefore, reasonable to strive for an increase in trade values from this point of view, especially for African countries.

Eurostat estimates that the EU is Africa’s largest trading partner since 33% of all exports and 31% of imports were performed with the Union in 2020. Preferential terms in international trade between the EU countries and their African colonies since Middle Ages were followed by the Yaoundé agreements firstly signed in 1963. Another trade extension to the EU and so-called ACP countries (African, Caribbean, and Pacific countries) was governed by Lomé Convention signed in 1975 which entered into the Cotonou Agreement in 2000. The most recent Post-Cotonou Agreement has taken effect from 15 April 2021 bearing the main goal of reducing poverty in these poorest countries in the world. One of the tools to achieve the goal is a regulation of trade – agreements creating free trade areas between the EU and particular countries involved (European Commission 2021).

At the same time, Felbermayr et al (2021) also show that African countries happen to be the most frequent targets of trade sanctions. And according to many opinions, the current geopolitical situation implies that Africa might be of utmost interest to European countries in the future.


Many discussions need to take place to decide whether or not to sign a free trade area. Policymakers thus need to know, among other arguments, how this agreement would affect current bilateral trade flows. Furthermore, it is necessary to estimate the effects of current agreements to know if they should not be modified or repealed at all. There are countries with free trade area in place, on hold, and still being negotiated or no agreement at all in Africa. Therefore, it is necessary to answer which of the agreements should have been arranged and, on the other hand, which of them should have been worked over. Moreover, other trade agreements between African countries, i.e. African continental free trade area – AfCFTA, or the rest of the world take place while being able to influence the impacts mentioned above.

In conclusion, the main research question is how trade agreements would affect bilateral flows between countries with the aim of reducing poverty and other important variables in Africa while estimating effects of possible agreements concluded in the future.


Contribution

Existing research suggests that free trade agreements affect bilateral flows between two countries. Jacob Viner (Viner 1950) highlighted both positive and negative static effects of FTAs/CUs later followed by dynamic concepts. Furthermore, Baier and Bergstrand (2007) found out that the agreement, in general, should almost double bilateral trade between involved countries after 10 years on average.

The aim of this thesis is thus to create a particular model reflecting trade flows with Africa which should be useful for the future policy-making of the EU. Furthermore, an overview of the trade between these two subjects should be provided. Concerning the signing of the Post-Cotonou agreement in 2021 accompanied by significant dynamics of trade flows intensified even more by the pandemic, the most recent data are going to be used to be able to update previous research.


Methodology

The estimation of bilateral trade effects should be done using the Gravity model which is a common methodology for analyzing trade flows (WTO 2019). To estimate a model, data from Input-Output tables, CEPII, Eurostat, or WTO can be used for obtaining as many relevant independent variables determining bilateral trade flow as possible. The so-called multilateral resistance term will be handled through a complex set of dummy variables (Baldwin and Taglioni 2006). The model is then processed through R studio or other statistical software. There are several guides explaining how to work with the Gravity model which can be used. Finally, the results have to be interpreted in conjunction with the corresponding policies of the EU.


Outline

Abstract
Introduction

Literature review
Overview of trade agreements in general
History of EU-Africa trade
Analysis of current trade agreements
• Division to 5 regions
Gravity model
• Evolution of the model
• Different methods (OLS, Poisson pseudo max likelihood,…)
• Dealing with biased results and errors
Data
Methodology
Results and policy implications

Conclusion
 
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