Adverse Selection Effect for South Asian Countries in FTA Formation An Empirical Study on the Determinants of FTA among the Bilateral Trading Partners

• Published in: South Asia economic journal (Institute of Policy Studies) Vol. 10; no. 1; pp. 1 - 30
• Main Authors: Jayathilaka, Ruwan, Keembiyahetti, Nandasiri
• Format: Journal Article
• Language: English
• Published: New Delhi, India SAGE Publications 01.01.2009; SAGE PUBLICATIONS, INC
• Subjects: Adverse selection; Economic factors; Economic models; Economic stabilization; Free trade; International cooperation; Negotiation; Neighborhoods; Tariffs; Trade agreements; International Trade; JEL: F14; JEL: F12; Adverse Selection; JEL: C25; Free Trade Agreements; Probit Model; JEL: D40

This study examines the economic and non-economic factors governing the decision of forming Free Trade Agreements (FTAs) between two non-zero trading partners by estimating a Probit model using 9,178 country pairs having 705 active and operational bilateral FTAs. This study works on the implied hypo...