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Free trade agreement (FTA) with China and interaction between export and imports

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dc.contributor University of Akureyri
dc.contributor.author Kristjánsdóttir, Helga
dc.contributor.author Guðjónsson, Sigurður
dc.contributor.author Óskarsson, Guðmundur Kristján
dc.date.accessioned 2022-06-16T01:03:07Z
dc.date.available 2022-06-16T01:03:07Z
dc.date.issued 2022-01-30
dc.identifier.citation Kristjánsdóttir , H , Guðjónsson , S & Óskarsson , G K 2022 , ' Free trade agreement (FTA) with China and interaction between export and imports ' , BALTIC JOURNAL OF ECONOMIC STUDIES , vol. 8 , no. 1 , pp. 1-8 . https://doi.org/10.30525/2256-0742/2022-8-1-1-8
dc.identifier.issn 2256-0742
dc.identifier.other PURE: 50922681
dc.identifier.other PURE UUID: 4d7b7d8e-b12b-422f-b1a8-e3a882855bad
dc.identifier.other unpaywall: 10.30525/2256-0742/2022-8-1-1-8
dc.identifier.uri https://hdl.handle.net/20.500.11815/3245
dc.description.abstract The world trade system appears to gravitate toward trade blocks. While the European Union (EU) is by far the largest trade block in Europe, the subject of this research is focused on another European block, the European Free Trade Association (EFTA), with the member states of Iceland, Liechtenstein, Norway, and Switzerland. Unlike the EU, the EFTA countries can enter into Free Trade Agreements (FTAs) individually, with another country, whenever they choose. The world's largest increasing trading house over the last two decades is China, but it has not yet signed an FTA with the EU. However, China has a bilateral agreement with both Iceland and Switzerland. The methodology of this research involves using the STATA program for statistical regression estimation of simultaneous equation system since it estimates the interaction between the trade going between the countries. This allows for considering substitution or complementary effects between the goods flowing back and forth between the countries. The methodology is based on the means of the gravity model. This research aims to answer the following question: is it beneficial for small countries such as Iceland and Switzerland to have a bilateral agreement with China? This research focuses on estimating trade flows, in US dollars, between China and Iceland on the one hand and between China and Switzerland on the other. Results from regression analysis indicate that when accounting for the FTAs, import to Iceland from China positively affects exports from Iceland to China, but not the other way around. However, estimates for trade between Switzerland and China show the reverse of this to be true. When presenting and analyzing literature and economic studies in the field, selection data and presenting the threestage regression result, accounting for the Free Trade Agreements with China, our conclusion is the following: The trade relation of China with the two small European countries of Iceland and Switzerland has developed such that in 2014 the Free Trade Agreements between China and Iceland, and China and Switzerland came into effect. A combination of the three-stage least-squares regression, as well as the gravity model, allowing for accountancy of FTAs is applied. We conclude that when accounting for the FTAs over the short period from 2011 through 2018, import to Iceland from China has stimulated exports from Iceland to China, but not the other way around. However, the estimates for Switzerland are reverse to the estimates received for Iceland.
dc.format.extent 8
dc.format.extent 1-8
dc.language.iso en
dc.relation.ispartofseries BALTIC JOURNAL OF ECONOMIC STUDIES; 8(1)
dc.rights info:eu-repo/semantics/openAccess
dc.subject Alþjóðaviðskipti
dc.subject China
dc.subject Exports
dc.subject Free trade agreements
dc.subject International trade
dc.subject EFTA
dc.subject Gravity model
dc.subject SDG 7 - Affordable and Clean Energy
dc.subject SDG 10 - Reduced Inequalities
dc.subject SDG 5 - Gender Equality
dc.subject SDG 13 - Climate Action
dc.subject SDG 6 - Clean Water and Sanitation
dc.subject SDG 8 - Decent Work and Economic Growth
dc.subject SDG 1 - No Poverty
dc.subject SDG 9 - Industry, Innovation, and Infrastructure
dc.title Free trade agreement (FTA) with China and interaction between export and imports
dc.type /dk/atira/pure/researchoutput/researchoutputtypes/contributiontojournal/article
dc.description.version Peer reviewed
dc.identifier.doi https://doi.org/10.30525/2256-0742/2022-8-1-1-8
dc.relation.url http://baltijapublishing.lv/index.php/issue/article/download/1675/1693
dc.contributor.department Faculty of Business Administration
dc.contributor.department Interdisciplinary Graduate Studies
dc.contributor.school School of Business and Science

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