The effect of the Colombian trade liberalisation process on the evolution of its international trade
Abreo Villamizar, Carlos Alberto
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The thesis examines empirically the extent to which Colombia's trade liberalisation, as a government strategy to boost its exports, has helped to balance its structural trade deficit. Based on the trade gravity model theory, we determine the factors that promote and/or hinder Colombian international trade, focusing on the impact of variables related to trade integration processes, particularly in the variable of free trade agreements. Furthermore, we evaluate the effect of the Colombian institutional quality on its exports and we delve into the impact generated for Colombian trade by the entry into force of the agreement with the European Union, an agreement that is one of the main treaties in relation to the amounts traded. The results confirm an adverse effect of the Colombian trade liberalisation process evidenced in the deepening of the country's trade balance. However, if it is analysed by type of traded good, it is observed that this process has promoted exports of non-fuel goods, although the growth of imports of this type of goods is greater. It also indicates that improving the country's institutional quality could be an important factor in promoting its exports. Finally, the analysis of the FTA with the EU establishes that this factor does not generate any (insignificant) effect on Colombian exports to the EU, although it promotes its imports.