New directions of trade for the agri-food industry: A disaggregated approach for different income countries, 1963 - 2000

Serrano, Raúl; Pinilla Navarro, Vicente Article New directions of trade for the agri-food industry: A disaggregated approach for different income countries, 1963 - 2000 Latin American Economic Review Provided in Cooperation with: Centro de Investigación y Docencia Económica (CIDE), Mexico City Suggested Citation: Serrano, Raúl; Pinilla Navarro, Vicente (2014) : New directions of trade for the agri-food industry: A disaggregated approach for different income countries, 1963 - 2000, Latin American Economic Review, ISSN 2196-436X, Springer, Heidelberg, Vol. 23, Iss. 1, pp. 1-22, https://doi.org/10.1007/s40503-014-0010-6 This Version is available at: https://hdl.handle.net/10419/108956 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may be saved and copied for your personal and scholarly purposes. You are not to copy documents for public or commercial purposes, to exhibit the documents publicly, to make them publicly available on the internet, or to distribute or otherwise use the documents in public. If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. http://creativecommons.org/licenses/by/2.0/ ORIGINAL RESEARCH New directions of trade for the agri-food industry: a disaggregated approach for different income countries, 1963–2000 Rau ´l Serrano •Vicente Pinilla Received: 4 October 2013 / Revised: 19 March 2014 / Accepted: 25 April 2014 ÓThe Author(s) 2014. This article is published with open access at Springerlink.com Abstract The principal objective of the present study is to explain the changes in the direction of agri-food trade flows during the second half of the twentieth century. Since the end of the Second World War, trade has tended to be concentrated among developed countries, breaking the pattern of complementarity among industrialized countries and developing countries from the first wave of globalization. Elsewhere, agricultural exports from developing countries to countries of similar income have significantly increased since the 1990s. To compare and explain the evolution of different trade directions, the present article estimates the gravity equation for the bilateral volume of agri-food trade, analyzed separately in four categories of trade flows based on the development level of countries. Specifically, we have used the UN-COMTRADE database to construct a data panel for bilateral trade among 30 reporting countries and 39 partner countries with a significant presence in international markets for the period 1963–2000. The following conclusions can be extracted from the present study. Firstly, while other types of trade, such as manufactures, enjoyed greater multilateral liberalization of their markets, strong market intervention caused them to base their growth on the proliferation and success of regional trade agreements in the North. As a result, agrifood trade concentrated progressively on developed economies. Secondly, the latest liberalization of some preferential trade agreements gave rise to new increases in agricultural trade, this time in South–South flows. Finally, the negative sign of income demand elasticity for imports of agricultural products from Southern R. Serrano (&) Department of Business Administration, Universidad de Zaragoza, Gran Vı ´a 4, 50005 Zaragoza, Spain e-mail: [email protected] V. Pinilla Department of Applied Economics and Economic History, Universidad de Zaragoza, Gran Vı ´a4, 50005 Zaragoza, Spain e-mail: [email protected] 123 Lat Am Econ Rev (2014) 23:10 DOI 10.1007/s40503-014-0010-6 countries demonstrates that the latter behaved like inferior goods and also explains why the export growth of such countries suffered a brake on such expansion. Keywords Agri-food trade Gravity equation Regional trade agreements Agrifood industry JEL classification F14 M16 N50 N70 Q17 1 Introduction From the mid-nineteenth century until the First World War the international economy witnessed a significant increase in market integration; this period is often referred to as the first wave of globalization. Industrialization, which took place principally in Europe, and an increase in incomes, accompanied by the reduction of transport costs, market liberalization and a stable economic setting provided by the gold standard were the principal motors of this process. The expansion of trade was one of the key elements in this first wave of globalization, together with the boom in capital movements and in transoceanic migrations. Agricultural and food products played a central role in the growth of exchanges, which from 1870 onward accounted for approximately 50 % of total trade. Trade was inter-industrial, within which exchanges of manufactures for primary products between countries with very different patterns of specialization were predominant (Lewis 1952; Findlay and O’Rourke 2007). The increased specialization of the most developed European countries in manufactured products generated an intense demand for raw materials and foodstuffs; such needs were met both by various lesser-developed European countries and the rest of the world (Aparicio et al. 2009). Most other countries were integrated into international trade, principally as exporters of primary products and importers of manufactures (Lewis 1970; Williamson 2006). Among the peripheral countries, some had excellent economic results based on export-led models; this was, for example, the case of Argentina (Bertola and Williamson 2006; Bulmer-Thomas 1987; Corte ´s Conde 1992; Gerchunoff and Llach 2011). After 1914, the globalization process was interrupted as a result of the outbreak of the First World War, which was followed by a far-reaching collapse, due to the depression of the 1930s and the Second World War (O’Rourke and Williamson 1999). International trade and market integration were seriously affected, both conjuncturally due to the two wars and more permanently as a result of the policies implemented by the majority of countries and which had as a deliberate objective the restriction of imports (Hynes et al. 2012). Agri-food trade experienced a severe contraction, in both volume and especially in value, due to the fall in its relative prices (Ocampo and Parra-Lancourt 2010). The countries most specialized in the export of primary products, and therefore most dependent on such exports for their economic growth, suffered such policies most severely. For example, the South American countries, with a very high participation in international agri-food trade 10 Page 2 of 22 Lat Am Econ Rev (2014) 23:10 123 prior to 1914, experienced severe difficulties which would have an important influence on their changing model of growth following the Second World War (Pinilla and Aparicio 2014). In the second half of the twentieth century, the integration of the world economy accelerated, once more especially in the Western countries, with the establishment of a new economic order which encouraged a stable environment of generalized growth. The pillars on which this new international economic order was based were the Bretton Woods monetary system, which provided great stability to exchange rates until its rupture at the beginning of the 1970s, and the deep-seated liberalization in the exchange of manufactures, as a consequence of the successive rounds of GATT. Although at first this process did no more than recover past levels of integration, since approximately the 1960s the integration process accelerated at an unprecedented rhythm, often called the second wave of globalization, in which trade once more played a key role (Findlay and O’Rourke 2007). The pattern of international trade came to be intra-industrial, predominantly between advanced economies with similar factor endowments (Krugman 1995). In addition, there was a profound change in the composition of international trade, characterized by an increase in the share of manufactured products and a sharp decline in that of agricultural and food products. In 1951, the latter accounted for 43 % of the value of total world trade. In the year 2000, this figure was only 6.7 %. Part of this declining importance is explained by the relative fall in their prices, but nevertheless the decrease in volume was also substantial (Serrano and Pinilla 2011a,2012). This new process of market integration was far removed from the pattern of complementarity developed throughout the first globalization. Both total trade and trade in agricultural products and food have become progressively concentrated on the exchange of goods among developed countries. Nations which historically were more dependent upon the export of agricultural products and food saw their traditional market shares fall, while the more developed countries increased their exchanges. Thus, the regions most dependent on the export of agricultural products (Africa and Latin America) witnessed a fall in their share of world agricultural trade. 1 Moreover, some of these countries not only saw their exports decline in relative terms, but also experienced a sharp deterioration in the ratio of agricultural exports to imports. Thus, Africa and Asia became net importers of agricultural products where they had once been net exporters. By contrast, the high-income nations, and in particular Europe, increased their share of world agricultural trade. Table 1reflects this decline in the share of developing countries, of approximately 10 percentage points from the 1960s until the end of the century. The counterpart has been the increasing weight of the developed countries, especially those of the European Union, in world agricultural markets. Thus, Europe represented 30.7 % of world agri-food exports in the 1950s while its share by the end of the century grew to 46.9 %. Such variations in performance were not unaffected by either the economic policies followed in diverse countries or by the obstacles placed in the way of international agricultural trade. The governments of the more developed countries supported agriculture more than any other sector, 1 The Argentinean case is paradigmatic: Cadenazzi (2012), Hora (2013), Llach (2006). Lat Am Econ Rev (2014) 23:10 Page 3 of 22 10 123 while many developing economies discriminated against it. 2 On this last point, the case of Latin America is especially notable, since many of its countries opted in the early stages of the period to develop policies based on import-substituting industrialization, which greatly penalized their agro-exporting sectors. Clearly, Africa has by far been the continent which has lost most of its quota in agri-food trade. From the 1950s onward, its exports were affected by the presence of early shocks, which may be related to decolonisation, a process that affected the majority of the countries in the region and had a significant impact on foreign trade, reflected in a loss of exports to international markets almost from the outset, and especially to the historic metropoli with which they maintained special relationships. In many cases, the change of power also affected the position of the European settlers, which in some cases had an important weight in export agriculture (Karshenas 2001). The other side of the coin in regional participations in exports is offered by imports. Thus, while Europe and North America significantly retracted in percentage terms (they moved respectively from 59 to 19 % of world exports in 1952–1959 to only 48 and 14 % en 1994–2000), those of Asia more than doubled (from 14 to 29 % in this same period) (Serrano and Pinilla 2011b). Table 2shows, for the two final decades of the twentieth century, the directions of agri-food trade and offers a view of how the share of agricultural trade among the countries of the North has been consolidated and even deepened. Approximately, 80 percent of agricultural and food exports from the developed countries are destined to other developed countries. Within this group, the boom in intra-EU trade has been very important, especially in the initial decades of the process of European integration (Pinilla and Serrano 2009). The same has occurred, from the 1990s on, with the surge of trade in the North American region, coinciding with the increasing importance of the North American Free Trade Agreement (NAFTA). It is also important to underline here that the composition of international agricultural trade asymmetrically affected exchanges among the diverse economic regions. The less developed countries exported basic products and products with a Table 1 Percentage of participation of the developed and developing countries in the international trade of agri-food products 1961–1963 1977–1979 1998–2000 Developed countries 57.87 64.97 68.94 Europe 30.67 39.82 46.94 Canada and USA 19.42 19.94 16.77 Oceania (developed) 7.29 4.90 4.86 Developing countries 41.87 34.71 30.90 Asia (developing) 15.60 12.46 15.29 Latin America and the Caribbean 14.79 14.95 12.09 Africa 11.49 7.30 3.52 Source: Authors’ elaboration, using UN-COMTRADE (2003) 2 In many countries of the developing world, the exports sector was penalized, through diverse economic policy measures (Anderson 2009). 10 Page 4 of 22 Lat Am Econ Rev (2014) 23:10 123 Table 2 Destination of agri-food exports, by region (percentage) Origin/destination North EU-15 Canada and USA South Asia and the Pacific Latin America and the Caribbean Near East and North Africa Sub-Saharan Africa Near East 1980 72 65 1 28 2 0 23 4 and North Africa 1985 61 44 7 39 2 0 35 1 1990 68 51 6 32 3 1 27 1 1995 64 43 5 36 4 1 30 1 2000 63 42 5 37 4 1 30 2 Sub-Saharan Africa 1980 85 71 9 15 30 3 8 1985 86 71 14 14 40 2 8 1990 75 67 5 25 50 2 18 1995 71 59 5 29 81 5 14 2000 61 46 5 39 11 1 8 19 Latin America and the Caribbean 1980 75 44 23 25 218 4 1 1985 75 43 25 25 411 9 2 1990 75 39 31 25 414 6 1 1995 67 33 27 33 819 5 2 2000 68 28 30 32 718 5 1 Asia and the Pacific 1980 61 24 12 39 27 2 9 2 1985 62 21 14 38 24 1 10 2 1990 63 21 12 37 26 2 8 2 1995 57 16 12 43 32 1 7 2 2000 57 15 14 43 32 1 7 2 EU-15 1980 82 76 4 18 2 3 10 4 1985 84 76 8 16 22 9 3 1990 88 82 5 12 22 6 2 1995 89 79 4 11 22 5 2 Lat Am Econ Rev (2014) 23:10 Page 5 of 22 10 123 Table 2 continued Origin/destination North EU-15 Canada and USA South Asia and the Pacific Latin America and the Caribbean Near East and North Africa Sub-Saharan Africa 2000 89 73 6 11 32 5 2 Canada 1980 65 29 14 35 13 14 6 2 and USA 1985 67 22 22 33 11 12 7 3 1990 70 22 24 30 12 10 6 1 1995 67 18 25 33 15 11 6 1 2000 67 13 32 33 12 14 6 1 Source: Authors’ elaboration, using UN-COMTRADE (2003). The South comprises developing countries and the North is integrated by developed countries, following UN country classifications based on development level 10 Page 6 of 22 Lat Am Econ Rev (2014) 23:10 123 low level of processing, while the high-income countries largely monopolized the market in highly processed products, precisely those which have shown throughout this period greater potential for growth (Serrano and Pinilla 2013). The developing countries have depended on exports to their traditional markets, which is to say Old Europe and rich North America. However, this position has progressively changed. The agricultural exports of developing countries to countries of similar income have significantly increased. These already represented 31 percent of total agricultural and food exports by 1990, a figure which increased to 38 percent at the end of the last century. This new trade pattern, with an increasing importance on the direction of South–South flows, is common to all the developing regions, and this is possibly related to the growth of the so-called emerging economies, increasing market liberalization and the success of some trade agreements among developing countries from the 1990s on. 3 Lastly, the governments of the more developed countries supported agriculture more than any other sector. By contrast, in the developing countries, it is habitual for inward-looking policies to discriminate in favor of industry as regards agriculture. Within agriculture, the sector oriented toward the production of foodstuffs for the domestic market received greatly support than the export marketoriented production (Anderson 2009). Given this context, the principal objective of the present study is to explain the changes in the directions of agricultural trade flows during the second half of the twentieth century. Our hypothesis is that these substantial changes in agricultural trade flows may be explained mainly by the successful liberalization of regional exchanges through various types of regional trade agreements, in a context of strong agricultural protectionism and due to the diverse specializations in trade in agricultural goods among developed and developing countries. With regard to the impact of regional trade agreements (RTAs), the European Union (EU) 4 in particular was especially successful in liberalizing the exchange of agri-food products among its members. Agricultural trade among them (taking the EU-15 as reference), displayed a spectacular increase, from 17.1 % of world agricultural exports in 1959–1966 to 26.8 % in 1994–2000 (Serrano and Pinilla 2011a). 5 In other regions of the world, such as Latin America, the effect of these agreements upon agricultural trade was much lesser (Serrano and Pinilla 2008). Merely in the 1990s, the Uruguay Round of GATT was able to produce a certain liberalization of the markets in agricultural products and a reduction of protectionism. From that point on, and also as a consequence of the dynamism of the Asian countries and of the stimulation of RTAs among developing countries, a new pattern emerged in the exchanges of agricultural products, defined by the boom in trade among the economies of the South. Secondly, the pattern of specialization in trade in agricultural products was diverse, at least until the 1990s, among developed and developing countries. The 3 This boom in South–South trade is even more important in manufactured products (Hanson 2012). 4 Hereafter, we shall use the term European Union (EU) for all those institutions which preceded it. 5 See also Dell’Aquila et al. (1999) or Diao et al. (1999), who demonstrate the extraordinary upsurge in intra-regional trade in various geographical areas. Lat Am Econ Rev (2014) 23:10 Page 7 of 22 10 123 developed countries have strengthened their specialization in high-value products and transformed agricultural products, while the developing countries continue to concentrate their exports on bulk and plantation products. This could have damaged the dynamism of the agri-food agricultural trade of these latter countries, since the lower income elasticity of such products has affected the growth in their exports. Such different specializations in the export of agri-food products have their roots in the decades prior to the Second World War. It may be considered that these were by 1960 strongly coherent with their factor endowment and institutional quality. The European advantage in transformed and high-value products may be placed in this way in relation to their technological advantage and to the process of industrialization. Changing that specialization is not an easy task. As several studies have made clear, it involves substantial costs (‘cost discovery’) (Hausmann and Rodrik 2003). Furthermore, the speed at which that change may be produced may be highly variable and will depend on the density of the product space near the area where each country has developed its productive capabilities (Hausmann et al. 2007). On the other hand of the achievement of this change, important consequences are derived from the point of view of economic growth (Hausmann and Klinger 2006). Precisely, some developing countries which have been able to most vary their composition toward high-value products display an improvement in their agri-food agricultural exports. 6 To test whether our hypotheses are correct, the present article estimates the gravity equation for the bilateral volume of agricultural trade, analyzed separately in four categories of trade flows: trade between high-income countries (N–N), trade flows which originate in high-income countries and are destined to low-income countries (N–S); trade flows whose origin is in developing countries and are exported to the developed world (S–N); and trade flows between low-income economies (S–S). Concretely, using the UN-COMTRADE (2013) database, we have constructed a data panel for bilateral trade among 30 exporting countries and 39 importing countries with a significant presence in international markets for the period 1963–2000. The empirical success of this equation in explaining trade patterns has engendered numerous subsequent articles, although very few have a long-term perspective, and nor have they concentrated on the agri-food trade and compared it to trade in different directions. Finally, it should be emphasized that the study shows how a correct estimation of the gravity equation must include fixed effects by country pairs; these serve as an approximation of ‘‘multilateral resistance’’, following the suggestions made by Anderson and van Wincoop (2003). In addition, the standard errors must be corrected using a Prais-Winsten estimation, as otherwise the models are subject to problems of specification. The following conclusions can be extracted from the present study. Firstly, while other types of trade, such as manufactures, enjoyed greater multilateral liberalization of their markets, strong market intervention caused them to base their growth 6 In the late twentieth century, significant changes were observed in this specialization, with significant economic and social effects. See the cases of Chile (Solbrig 2008), Costa Rica (Botella 2012) and Peru (Velazco and Velazco 2012: 164–166). 10 Page 8 of 22 Lat Am Econ Rev (2014) 23:10 123 period, at least until the 1990s. On this point, the coefficient of the GATT variable is extremely noteworthy; it does not display positive and statistically significant effects. It only shows positive and statistically significant effects for South–North flows following the Uruguay Round (see the coefficient of the variable Gatt 94-00 ,in Column 2 of Table 3). Table 3 Results of gravity equation for international trade in agri-food products disaggregated by country trade flows (based on their income level) lnX ijt Agri-food trade PCSE estimation S–S S–N N–N N–S lnY it -2.186*** -1.175*** -1.860** 0.368 lnY jt 2.341*** 2.987*** 1.521*** 0.842*** lnYpcp it 3.847*** 2.033*** 2.385** -0.442 lnYpcp jt -1.278** -2.077** -0.277 -0.667*** lnDist ij lnExcvol ijt 0.002 0.002 -0.010* -0.001 Border ij Language ij Both_in_MERCOSUR ijt 0.157 Both_in_ANDEAN ijt 0.104 Both_in_ASEAN ijt -0.074 Both_in_GSTP ijt 0.094 0.154 Both_in_APEC ijt 0.538** 0.261 0.184 -0.192 Both_in_NAFTA ijt 0.189 0.146 0.760*** One_in_ NAFTA ijt 0.778*** 0.147 -0.248** 0.009 One_in_ EU ijt 0.029 0.085* One_in_ EFTA ijt -0.048 0.247*** One_in_ CER ijt 0.091 0.001 Both_in_EU ijt 0.694*** Both_in_EFTA ijt 0.647*** Both_in_CER ijt -0.035 NRA ijt -0.005 0.028 Gatt 63-94 -0.166* -0.145 -0.005 0.022 Gatt 94-00 0.177 0.209* 0.138 0.161 Constant drop drop drop drop Country FE Yes Yes Yes Yes No.observ. 10.061 10.597 14.401 15.121 R-squared. 0.512 0.630 0.835 0.567 Prais-Winsten estimation with PCSE and fixed effects. N–N: North–North trade, among high-income countries; N–S: North–South trade, exports from high-income countries to low-income countries; S–N: South-North trade, exports from low-income countries to high-income countries; S–S: South–South trade, among low-income countries All variables are in logarithms, except binary variables (such as common border, language and different RTAs). ***, ** and * denote statistical significance at the 1, 5 and 10 % level respectively Lat Am Econ Rev (2014) 23:10 Page 15 of 22 10 123 On this point, it is very interesting to check how just the APEC variable displays a positive and significant result in the liberalization of markets among developing countries. These effects are not found for previous RTAs such as Mercosur, Andean Pact (Andean), Asean or, later, GSTP. It could be considered that this result is unsurprising. Regional trade agreements for developing countries were aimed more at the creation of integrated markets for industrial products which would facilitate the success of import substitution industrialization policies than at the integration of their agri-food markets. The Latin American case is paradigmatic, since the pessimism which existed concerning the possibilities of exporting manufactures, led for example the Economic Commission for Latin America (CEPAL) to recommend regional integration as an alternative, thereby broadening the internal market for this type of products (Bulmer-Thomas 1998: 345–357). In the European case, tariff dismantling was not only complete and relatively rapid for all product types, but instead the Common Agricultural Policy was in fact the first European policy, which greatly strengthened the integration of its market of agri-food products. Lastly, the variable introduced to control for the impact of policies supporting or discriminating against export agriculture is not significant for any trade flow of the countries of the South. It is possible that this is due to the scarcity of the existing data; in some years, these have had to be estimated using those of subsequent years. It is also reasonable to assume that the fixed effects introduced in the model already control for the impact of these policies, and thus, these coefficients are not significant. 4 Conclusions The objective of the present study has been to explain the fundamental changes experienced by agricultural trade in the second half of the twentieth century. The first of these was a progressive concentration of this trade among developed countries, while the second was a significant boom in agricultural trade among developing countries, since the final decade of the last century. Our starting hypotheses were that these changes could be explained by regional specialization by the distinct types of countries in different agricultural products for export and also due to the different effects regarding agricultural trade in the established RTAs. To explain the concentration of trade among developed countries, our gravity model has underlined that RTAs such as the EU, EFTA or NAFTA have significantly encouraged agricultural trade among developed countries. In contrast, the developing countries were faced with highly protected markets and a relative initial failure in their attempts to liberalize their regional markets. 10 Page 16 of 22 Lat Am Econ Rev (2014) 23:10 123 In addition, the agri-food products exported by the Southern countries to any destination had a demand elasticity which was highly negative and statistically significant. The boom from the final decade of the twentieth century in South–South agricultural trade can be explained, according to our model, by the fact that the demand for agricultural products and food from some emerging countries, such as China, has grown very quickly. This is clearly shown by the model’s results, which underline the strong stimulus to trade among developing countries, as the market size of the importers increases. Acknowledgments We are especially grateful to the external reviewers and the editor for their suggestions. This study has received financial support from the Ministry of Science and Innovation of the Spanish Government, project ECO 2012-33286 and the Department of Science, Technology and Universities of the Government of Aragon, research groups ‘Agri-food Economic History’ and ‘CREVALOR’. Open Access This article is distributed under the terms of the Creative Commons Attribution License which permits any use, distribution, and reproduction in any medium, provided the original author(s) and the source are credited. Appendix Results of gravity equation for international trade in agri-food products disaggregated by country trade flows (based on their income level). See Table 4. Lat Am Econ Rev (2014) 23:10 Page 17 of 22 10 123 Table 4 Random Effects and Fixed Effects estimations lnX ijt Agri-food exports Random Effects Agri-food exports Fixed Effects S–S S–N N–N N–S S–S S–N N–N N–S lnY it 0.44*** 0.47*** 0.18*** 0.95*** -2.74** -1.51*** -1.56*** 1.323*** lnY jt 0.56*** 1.34*** 1.00*** 0.90*** 2.46*** 3.15*** 1.63*** 0.409*** lnYpcp it 0.97*** 0.56*** 0.41*** -0.11 4.49** 2.73*** 2.07*** 1.323*** lnYpcp jt 0.11 -1.59*** -0.26*** -0.30*** -1.32*** -2.43*** -0.50*** 0.409*** lnDist ij -1.18*** -0.07 -0.48*** -1.11*** lnExcvol ijt 0.03*** -0.01 -0.007** 0.01** 0.053*** 0.01 -0.01*** 0.011*** Border ij 1.01** 0.37 0.55** -0.72 Language ij -0.56 0.99** 1.32*** 0.49** Both_in_MERCOSUR ijt 0.12 0.13 Both_in_ANDEAN ijt -0.22 -0.20 Both_in_ASEAN ijt 0.50 0.81 Both_in_GSTP ijt -0.08* 0.20*** Both_in_APEC ijt 0.90*** 0.51*** 0.28*** -0.02 0.69*** 0.40*** 0.35*** -0.34** Both_in_NAFTA ijt -0.01 0.19 1.05** 0.04 0.27 1.23** One_in_ NAFTA ijt 0.80*** 0.15** -0.34*** 0.28*** 0.87*** 0.20** -0.30*** 0.22** One_in_ EU ijt -0.03 0.04* 0.50*** 0.02 0.06** 0.43*** One_in_ EFTA ijt -0.11* 0.26*** 0.64*** -0.19** 0.29*** 0.78*** One_in_ CER ijt 0.05 0.01 1.33*** 0.32* 0.03 0.67*** Both_in_EU ijt 1.03*** 0.99*** Both_in_EFTA ijt 0.83*** 0.93*** Both_in_CER ijt 0.27 0.22 NRA ijt -0.04 -0.00 0.07 -0.06* Gatt 63-94 -0.33*** -0.08* 0.26*** -0.01 -0.28*** -0.11** 0.24*** 0.02 10 Page 18 of 22 Lat Am Econ Rev (2014) 23:10 123 Table 4 continued lnX ijt Agri-food exports Random Effects Agri-food exports Fixed Effects S–S S–N N–N N–S S–S S–N N–N N–S Gatt 94-05 0.24*** 0.28** 0.30*** 0.07 0.26*** 0.27*** 0.29*** 0.14** Constant -13.7*** -26.1*** -16.8*** -24.8*** -7.6*** -31.4*** -18.9*** -33.6*** Country FE Yes Yes Yes Yes No. observ. 10.061 10.597 14.401 15.121 10.061 10.597 14.401 15.121 R-Squared. 0.40 0.45 0.56 0.43 0.29 0.19 0.44 0.27 LM Breuch–Pagan RE [OLS 0.00 0.00 0.00 0.00 F-test FE [OLS 0.00 0.00 0.00 0.00 Hausman test FE [RE 0.00 0.00 0.00 0.00 Wald test 0.00 0.00 0.00 0.00 Woolridge 0.00 0.00 0.00 0.00 Prais-Winsten estimation with PCSE and fixed effects. N–N: North–North trade, among high-income countries; N–S: North–South trade, exports from high-income countries to low-income countries; S–N: South–North trade, exports from low-income countries to high-income countries; S–S: South–South trade, among low-income countries All variables are in logarithms, except binary variables (such as common border, language and different RTAs) ***, ** and * denote statistical significance at the 1, 5 and 10 % level respectively Lat Am Econ Rev (2014) 23:10 Page 19 of 22 10 123 References Anderson JE (1979) A theoretical foundation for the gravity equation. Am Econ Rev 69:106–116 Anderson K (2009) Distortions to agricultural incentives. A global perspective, 1955–2007. Palgrave Macmillan and The World Bank, Washington Anderson K, Valenzuela E (2008) Estimates of distortions to agricultural incentives, 1955 to 2007, spreadsheet at www.worldbank.org/agdistortions, World Bank, Washington DC, October. Accessed February 2004 Anderson JE, Van Wincoop E (2003) Gravity with gravitas: a solution to the border puzzle. Am Econ Rev 93(1):170–192 Aparicio G, Pinilla V, Serrano R (2009) Europe and the international trade in agricultural and food products, 1870–2000. In: Lains P, Pinilla V (eds) Agriculture and economic development in Europe since 1870. Routledge, London, pp 52–75 Baier SL, Bergstrand JH (2007) Do free trade agreements actually increase member’s international trade? J Int Econ 71:72–95 Baldwin R, Taglioni D (2006) Gravity for dummies and dummies for gravity equations. NBER working papers 12516 Beck N, Katz JN (1995) What to do (and not to do) with time-series cross-section data. Am Polit Sci Rev 89:634–647 Bergstrand JH (1985) The gravity equation in international trade: some microeconomic foundations and empirical evidence. Rev Econ Stat 67:474–481 Bergstrand JH (1989) The generalized gravity equation, monopolistic, and the factor-proportions theory in international trade. Rev Econ Stat 71:143–153 Be ´rtola L, Williamson J (2006) Globalization in Latin America before 1940. In: Bulmer-Thomas V, Coatsworth JH, Corte ´s-Conde R (eds) The Cambridge economic history of Latin America. The long twentieth century, vol II. Cambridge University Press, Cambridge, pp 11–56 Botella E (2012) El modelo agrario costarricense en el contexto de la globalizacio ´n (1990–2008): oportunidades y desafı ´os para reducir la pobreza rural. Ager. Revista de Estudios sobre Despoblacio ´n y Desarrollo Rural/J Depopul Rural Dev Stud 12:7–49 Bulmer-Thomas V (1998) La Historia Econo ´mica de Ame ´rica Latina desde la Independencia. Fondo de Cultura Econo ´mica, Mexico Cadenazzi G (2012) El estancamiento del agro argentino y el mercado mundial. De la Gran Depresio ´nala Segunda Guerra Mundial. Hist Agrar 57:79–104 CEPII (2007) CEPII’s Data-Base http://www.cepii.fr/CEPII/. Accessed September 2007 Cho G, Sheldon I, McCorriston S (2002) Exchange rate uncertainty and agricultural trade. Am J Agric Econ 84(4):931–942 Corte ´s Conde R (1992) El crecimiento de la economı ´a argentina, c. 1870–1914. In: Bethell L (ed) Historia Econo ´mica de Ame ´rica Latina, vol. 10 Ame ´rica del Sur, c. 1870–1930. Cambridge University Press/Editorial Crı ´tica, Barcelona, pp 13–40 Deardorff A (1984) Testing trade theories and predicting trade flows. In: Jones R, Kenen P (eds) Handbook of international economics. North Holland, Amsterdam, pp 467–517 Dell’Aquila C, Sarker R, Meilke K (1999) Regionalism and trade in agrifood products union. Working paper 99-5 international agricultural trade research consortium Diao X, Roe T, Somwaru A (1999) What is the cause of growth in regional trade: trade liberalization or RTA’s? The case of agriculture. Working paper 99-1 international agricultural trade research consortium Evenett SJ, Keller W (2002) On theories explaining the success of the gravity equation. J Polit Econ 110(2):281–316 FAOSTAT (2004) FAOSTAT-Agriculture-Database FAO. http://faostat.fao.org/default.aspx. Accessed September 2007 Feenstra RC (2004) Increasing returns and the gravity equation. In: Feenstra R (ed) Advanced international trade: theory and evidence. Princeton University Press, Princeton Feenstra RC, Markusen JA, Rose AK (1998) Using the gravity equation to differentiate among alternatives. Theories of trade. Can J Econ 34(4):430–447 Feenstra RC, Markusen JA, Rose AK (2001) Understanding the home market effect and the gravity equation: the role of differentiating goods. Working paper 6804 NBER 10 Page 20 of 22 Lat Am Econ Rev (2014) 23:10 123 Findlay R, O’Rourke KH (2007) Power and plenty: trade, war, and the world economy in the second millennium. Princeton University Press, Princeton Gerchunoff P, Llach L (2011) Dos siglos en las economı ´as del Plata, 1810–2010. In: Be ´rtola L, Gerchunoff P (eds) Institucionalidad y desarrollo econo ´mico en Ame ´rica Latina. Naciones Unidas, Santiago de Chile Greene WH (2000) Econometric analysis. Prentice Hall International, London Hanson GH (2012) The rise of middle kingdoms: emerging economies in global trade. J Econ Persp 26(2):41–64 Hausmann R, Klinger B (2006) Structural transformation and patterns of comparative advantage in the product space, center for international development working paper, 128, Harvard University Hausmann R, Rodrik D (2003) Economic development as self discovery. J Dev Econ 72(2):603–633 Hausmann R, Hwang J, Rodrik D (2007) What you export matters. J Econ Growth 12:1–25 Helpman E (1987) Imperfect competition and international trade: evidence from fourteen industrial countries. J Jpn Int Econ 1(1):62–81 Helpman E, Krugman P (1985) Market structure and foreign trade; increasing returns, imperfect competition, and the international economy. MIT Press, Cambridge Hiaso C (1986) Analysis of panel data. Cambridge University Press, Cambridge Hora R (2013) La evolucio ´n del sector agroexportador argentino en el largo plazo, 1880–2010. Hist Agrar 58:145–181 Hummels D, Levinsohn J (1995) Monopolistic competition and international trade: Reconsidering the evidence. Quart J Econ 110:799–836 Hynes W, Jacks DS, O’Rourke KH (2012) Commodity market disintegration in the interwar period. Eur Rev Econ Hist 16(2):119–143 Karshenas M (2001) Agriculture and economic development in sub-Saharan Africa and Asia. Camb J Econ 25:315–342 Krugman P (1995) Growing world trade: causes and consequences. Brook Papers Econ Act 1:327–377 Lewis AW (1952) World production, prices and trade, 1870–1960, the Manchester school of economic and social studies. De Economist XX(2):105–138 Lewis AW (1970) Tropical development 1880–1913. Allen & Unwin, London Llach L (2006) Argentina y el mercado mundial de sus productos, 1926–1976. CEPAL, Buenos Aires O’Rourke KH, Williamson JG (1999) Globalization and history. The evolution of a nineteenth-century Atlantic economy. The MIT Press, Cambridge Ocampo JA, Parra-Lancourt M (2010) The terms of trade for commodities since the mid-19th century. J Iberian Latin Am Econ Hist 28(1):11–44 Pinilla V, Aparicio G (2014) Navigating in troubled waters: South American exports of agricultural and food products in the World market, 190-1938. Working Paper AEHE DT-1406, 2014, Asociacio ´n Espan ˜ola de Historia Econo ´mica Pinilla V, Serrano R (2009) Agricultural and food trade in the European Union since 1963. In: Patel K (ed) Fertile ground for Europe? The history of European integration and the common agricultural policy since 1945. Nomos, Baden-Baden, pp 273–300 Rose AK (2000) One money, one market: estimating the effect of common currencies on trade. Econ Policy 30:7–45 Rose AK (2004) Do we really know that the WTO increases trade? Am Econ Rev 94(1):98–114 Rose AK, van Wincoop E (2001) National money as a barrier to international trade: the real case for currency union. Am Econ Rev 91(2):386–390 Serrano R, Pinilla V (2008) Comercio agrario latinoamericano, 1963–2000: aplicacio ´n de la ecuacio ´n gravitacional para flujos desagregados de comercio. Working Paper 412/2008 Fundacio ´n de las Cajas de Ahorro Serrano R, Pinilla V (2010) Causes of world trade growth in agricultural and food products, 1951–2000: a demand function approach. Appl Econ 42(27):3503–3518 Serrano R, Pinilla V (2011a) The evolution and changing geographical structure of world agri-food trade, 1950–2000. Rev Hist Ind 46:97–126 Serrano R, Pinilla V (2011b) Agricultural and food trade in European Union countries, 1963–2000: a gravity equation approach. E ´con Soc Se ´r Hist E ´con Quant AF 43(1):191–219 Serrano R, Pinilla V (2012) The long-run decline in the share of agricultural and food products in international trade, 1951–2000: a gravity equation approach to its causes. Appl Econ 44(32): 4199–4210 Lat Am Econ Rev (2014) 23:10 Page 21 of 22 10 123 Serrano R, Pinilla V (2013) Changes in the structure of world trade in the agri-food industry: the impact of the home market effect and regional liberalization from a long-term perspective, 1963–2010. Agribusiness. doi:10.1002/agr.21355 Solbrig OT (2008): Structure, performance, and policy in agriculture. In: Bulmer-Thomas V, Coatsworth J, Corte ´s-Conde R (eds) Cambridge Economic History of Latin America, vol 2, pp 481–536 UN-COMTRADE (2003) UN Commodity Trade Statistics Database. Statistical Division of the United Nations. http://comtrade.un.org/db/. Accessed September 2007 Velazco J, Velazco J (2012) Caracterı ´sticas del empleo agrı ´cola en el Peru ´. In: Garavito C, Mun ˜oz I (eds) Empleo y Proteccio ´n Social. Pontificia Universidad Cato ´lica del Peru ´, Lima, pp 161–211 WDI (2004) World development Indicators cd-rom. World Bank, Washington Williamson JG (2006) Globalization and the poor periphery before 1950. The MIT Press, Cambridge Wooldridge J (2001) Econometric analysis of cross section and panel data. MIT Press, Cambridge 10 Page 22 of 22 Lat Am Econ Rev (2014) 23:10 123