Study On Trade Effects Of FTA Between China And Peru

The Free Trade Agreement(FTA)between Peru and China has developed a new path for economic cooperation.Both nations complement each other economically based on their history,commercial ties,and overall mutual trust.Peru has to take advantage of this great economic relationship with China in order to learn and stimulate economic well-being.Peru has been and will remain a primary export economy;meanwhile China is an industrialized economy.It is because of Peru's position as a primary good exporter that has led to China to invest and trade in such products.Currently,the commercial exchange of goods is the most developed relationship among both nations.However,there is an urgent need to drift away from the same old pattern.The modality,export capacity,and services sector which have shown Peru's weaknesses have to undergo a drastic evolution.The FTA serves as the perfect platform to stimulate economic growth.China will contribute to investments in infrastructure,growth in product diversification,and increase the level of technological transfer.This research thesis describes the concepts and types of free trade agreements and current trading partners of Peru and China.The advantages of a FTA as well as the economic impact in both parties,Peru and China,are to be observed.We will learn about the commercial history between Peru and China;we will see how the FTA signed by these two nations has evolved.The trade balance performance,the progress and setbacks after signing this trade agreement are also important.To identify the effects of FTA it is important to unravel the effects of regional integration of other changes in the economy.To do this,we will execute the gravity model,which estimates bilateral trade between countries and explains the trade with a series of variables;in that way we will discover if the estimated relations change as a consequence of the implementation of the FTA.