Trade Agreements and Latin American Trade (Creation and Diversion) and Welfare

34 Pages Posted: 13 Apr 2020 Last revised: 6 Nov 2020

Date Written: April 8, 2020


This study analyses the process of economic integration in Latin America. Making use of a structural gravity model, this paper provides an ex-post assessment of the effect of the trade agreements (TAs) signed by Latin American countries on international trade. We account for the last wave of TAs proliferation and estimate treaty level effects. On average, TAs had a positive effect on Latin American trade. This holds true for both intra-Latin American agreements and agreements between Latin American countries and the rest of the world. However, we unveil that these average estimates cover a substantial degree of heterogeneity across TAs. Additionally, we quantify ex-ante general equilibrium effects on the trade volumes and welfare of Latin American countries under different scenarios of deeper integration.

Keywords: international trade, trade agreements, Latin America, welfare effects

JEL Classification: F13, F14, F15, O54

Suggested Citation

El Dahrawy Sánchez-Albornoz, Ayman El Dahrawy Sánchez-Albornoz and Timini, Jacopo, Trade Agreements and Latin American Trade (Creation and Diversion) and Welfare (April 8, 2020). Banco de Espana Working Paper No. 2009, Available at SSRN: or

Jacopo Timini

Banco de España ( email )

Alcala 50
Madrid 28014

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