Title: Trade Creation, Trade Diversion effects of NAFTA on vegetable and fruit trade flows

Authors: David Karemera, Viceola D. Sykes, Lucy J. Reuben

Addresses: College of Business and Applied Professional Sciences, South Carolina State University, Orangeburg, SC 29117, USA. ' College of Business and Applied Professional Sciences, South Carolina State University, Orangeburg, SC 29117, USA. ' The Fuqua School of Business, Duke University, Durham, NC 27708, USA

Abstract: The present study empirically estimates and evaluates the impact of NAFTA in the vegetable and fruit trade between the USA and Mexico. The import price elasticities suggest that imports are not sensitive to price changes. However, the income elasticities of import demand vary by commodities. As expected, the vegetables and fruits exhibit strong seasonality while the import dynamics are commodity-specific. The amount of trade expansion is estimated using import price elasticities from a dynamic import demand model for the commodities. This study demonstrates that there is trade expansion attributable to NAFA in the vegetable and fruit trade. The amount of Trade Creation (TC) is greater than the amount of Trade Diversion (TD) in most commodities examined.

Keywords: vegetable trade; fruit trade; import model; NAFTA; trade creation; trade diversion; USA; United States; Mexico.

DOI: 10.1504/WREMSD.2007.013608

World Review of Entrepreneurship, Management and Sustainable Development, 2007 Vol.3 No.2, pp.142 - 157

Available online: 09 May 2007 *

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