Free trade agreements (FTAs) and export structures: evidence from Thailand

Abstract

This study aims to investigate the role of (in-effect) FTAs in influencing export structures, defined as intensive margin, extensive margin (products and markets) and sophistication at product level using Thailand’s FTA-partner countries as a case study during 2006-2020. The results show that FTAs tended to generate favorable impacts in enhancing export structures in Thailand, except the extensive margin in terms of new products. The preferential treatments noticeably expanded (existing) export products of Thailand into the FTA-partner countries (the extensive margin in terms of markets) and helped maintain traditional products exporting into these countries. Impacts of FTAs in improving the intensive and extensive margins were pronounced in Middle-income partners and in manufacturing products. ASEAN and China were export destinations where FTAs driven the intensive and extensive margins (markets) played a noticeable role. Importance of AFTA and ASEAN-China FTA was also observed when export sophistication is concerned. Imports through FTAs only helped enhance export sophistication.