Do the Free Trade Agreements Increase Swedish Export? : A Gravity Study

Abstract

The WTO strives to advance trade liberalization and the vast majority of the future global growth is expected to occur outside of Europe. The EU's strategy to face this development is to pass free trade agreements. The purpose of these agreements is to increase trade and stimulate growth, which according to trade theory, impacts a small and trade dependent country like Sweden. Previous research on free trade agreements shows positive effects on trade flows but it is rather uncertain how individual countries and Swedish export have been affected. The purpose of this study is therefore to empirically analyze whether free trade agreements have a significant effect on the Swedish export of goods during 1998-2017. To determine the effect panel data and three econometric models are used. The gravity model constitutes the theoretical basis of the inquiries. Our final judgement based on the three model characteristics and their result is that we cannot conclude whether free trade agreements has a significant effect on the Swedish export of goods during 1998-2017