Theses and Dissertations - Department of Economics, Finance & Legal Studies

Permanent URI for this collection

https://ir.ua.edu/handle/123456789/99

Browse

Browsing Theses and Dissertations - Department of Economics, Finance & Legal Studies by Author "Addy, Samuel N."

Now showing 1 - 2 of 2
  • Thumbnail Image
    Item
    The economic implications of the prospective Free Trade Agreement between the United States and Egypt
    (University of Alabama Libraries, 2010) El-Karaksy, Hoda; Pecorino, Paul; University of Alabama Tuscaloosa
    Abstract Egypt is a fairly large country with a struggling economy, like many others in the region. An improved economic performance in both Egypt and other countries in North Africa and the Middle East has the potential to raise the living standards of millions of people; this in turn could improve the region's political climate. Understanding how factors such as trade policy can affect Egypt is important for policy decisions in the US and Egypt. This issue is thus investigated in three essays that quantify the impact of a prospective bilateral Free Trade Agreement (FTA) between Egypt and the United States (US). In the first essay, I provide an econometric estimate of the effects of accessing the US market as well as the effects of Egyptian institutional quality on trade. I apply the gravity model to Egypt's trade flows for 2004 and find that the FTA could increase aggregate exports to the US between 140 and 157%. In the second essay, I examine the effects of participation in the FTA on the inward Foreign Direct Investment (FDI) to Egypt from the US and the rest of the world. I estimate gravity models of bilateral investment for 2005 and find evidence that this prospective FTA would be associated with a reduction of inward FDI to Egypt between 28% and 34% of the 2005 level. In the third essay, I investigate the current debate over US aid to Egypt, to identify whether participation in an FTA would be a complement or a substitute to US foreign aid. The analysis is based on a country-pair foreign aid difference regression model for 1980 and the years 2004 and 2007. The empirical evidence supports the complementary relationship between US foreign aid and this prospective FTA: The FTA would lead to increased foreign aid from the US to Egypt.
  • Thumbnail Image
    Item
    Endogeneity and dynamics in the impact of free trade agreements on trade and foreign direct investment
    (University of Alabama Libraries, 2010) Lira, Cristina; Lee, Junsoo; Reed, Robert R.; University of Alabama Tuscaloosa
    In the study of the impact of Free Trade Agreements on Foreign Direct Investments and on trade flows, there are some econometric issues that have not been fully addressed. This research aims to provide a discussion of these econometric issues and to present, using the most advanced econometric tools, new empirical results useful for understanding the relationship among regional integration, FDI and trade of goods. The research results in three self-contained, closely related papers. The first paper analyzes the relationship between FTA and FDI, focusing on the estimation bias that arises when the researcher does not consider the endogeneity of FTA, the fact that the relationship between FTA and FDI is dynamic, and the potential correlation between the current level of FDI and future participation in trade agreements as an additional source of endogeneity. This source of endogeneity did not receive attention in the international trade literature. Using the dynamic panel estimation method, the results show that, when the sources of bias are controlled for, trade agreements do not promote FDI in the way supported by previous empirical analysis and some theoretical arguments. The second paper focuses on the relationship between FTA and trade flows. Also in this case, not controlling for the econometric issues presented above produces a biased estimation of the impact of trade agreements. The paper addresses endogeneity, combining matching and difference-in-differences estimation. In addition, it applies two modifications of this methodology to evaluate the delayed impact of FTA and to control for the correlation between the current level of trade and future participation in trade agreements. The results show that the impact of trade agreements depends on the anticipated policy environment and that the benefits of trade agreements extend over time. The third paper analyzes the impact of FTA on FDI using a different methodology in order to strongly support a result in contrast to standard findings. Using matching combined with dynamic panel models, the results confirm that FTA does not promote FDI. This paper also illustrates the necessity of a dynamic specification, because the non-reversibility of the investments affects the impact of other variables.