Does it Matter Who You Sign With? Comparing the Impacts of N orth– S outh and S outh– S outh Trade Agreements on Bilateral Trade

Abstract Free trade agreements (FTAs) lead to a rise in bilateral trade regardless of whether the signatories are developed or developing countries. Furthermore, the percentage increase in bilateral trade is higher forSouth–South agreements than forNorth–South agreements. The results are robust across a number of gravity model specifications in which we control for the endogeneity ofFTAs(with bilateral fixed effects) and also take account of multilateral resistance in both estimation (with country‐time fixed effects) and comparative statics (analytically). Our analytical model shows that multilateral resistance dampens the impact ofFTAson trade by less inSouth–South agreements than inNorth–South agreements, which accentuates the difference implied by our gravity model coefficients, and that this difference becomes larger as the number of signatories rises. For example, allowing for lags and multilateral resistance, a four‐countryNorth–South agreement raises bilateral trade by 53% while the analogousSouth–South impact is 107%.