This Rapid Evidence Assessment (REA) addresses two questions, to which
it finds the literature offers partial answers (that can be supplemented
by flanking analyses).
- 1. What has been the impact of Free Trade Agreements (FTAs) between
developed and developing countries on economic development in
- 2. What does this evidence tell us about how developing countries
might best benefit from new FTAs (such as Economic Partnership
Agreements (EPAs)), and how can they avoid harm?
Focusing particularly on analyses of fully or substantially completed
FTAs, the REA finds that although some aspects of these questions have
been assessed extensively, others have been largely ignored and that,
even in the areas where coverage is good, findings differ markedly
between studies. It is based on a detailed quality assessment (QA) of 45
FTAs involving most Organisation for Economic Cooperation and
Development states and 35 developing countries and regions. Most are
North–South, but a strong sample of South–South agreements is also
included. No systematic difference in the impact of North–South and
South–South agreements was found in the assessed literature.
The literature provides little guidance on what happens in practice.
None of the high and moderate quality studies estimated the
distributional impact or the employment and environmental effects of
fully or substantially implemented FTAs. Two studies of FTAs near the
start of their implementation period flagged the potential loss of
government revenue from reduced tariffs – but no study of a mature FTA
estimated the actual effects (or analysed the impact of government’s
The minimum lesson is that at an aggregate level FTAs are in most cases
neither ‘a golden bullet’ that will automatically destroy impediments to
trade nor a potent source of the harm envisaged by critics. But the
operative words are ‘at an aggregate level’ – particularly, though not
exclusively, as regards the potential for harm.
Stevens, C.; Irfan, M.; Massa, I.; Kennan, J. The Impact of Free Trade Agreements between Developed and Developing Countries on Economic Development in Developing Countries: A Rapid Evidence Assessment. Overseas Development Institute, London, UK (2015) ix + 46 pp.