The Uneven Roles of FTAs: Selection Effect or “Learning†Effect?

Previous studies on the role of FTAs in promoting members’ international trade have usually focused on FTA premium, ignoring the difference between selection effects – trade developments before the formation of FTAs – and “learning†effects – trade growth after the formation of FTAs. This paper considers this difference, using a large bilateral trade panel comprising data covering more than 50 years from 178 countries. South–South FTAs and North–South FTAs are most related to the selection effect while North–North FTAs have a significant “learning†effect.