Assessment of Export Effects Based on Chow Statistical Test Applied to Free Trade Agreements

Abstract

The paper analyzes export effects in the context of the Chile-Republic of Korea and Peru-China free trade agreements (FTAs) using Chow’s statistical tests. The article examines the export volumes of subheading 740311 HS from Chile to South Korea and 230120 HS from Peru to China, respectively. The choice of research objects was determined by the relative proximity of the export structure of Latin American countries and Russia.
The Chow test allows to assess the presence/absence of statistically significant changes in the linear trend of exports of specified goods before and after the conclusion of free trade agreements. Using the Chow tests, it is shown that: 1) structural changes in linear trend of exports of subheading 740311 of the HS to South Korea are statistically significant after the entry into force of the Chile-Republic of Korea FTA agreement; 2) statistically insignificant after the entry into force of the Peru-China FTA in relation to subheading 230120.
It is shown that relying only on the use of statistical data, bypassing economic and other aspects, cannot provide a comprehensive analysis of the effectiveness of FTA agreements. However, including these factors in the research contributes to drawing conclusions necessary for making informed decisions on the creation of a free trade area.