The Free Trade Agreement between Chile and the Republic of Korea: evaluation through synthetic controls

In 2003, Chile and the Republic of Korea signed the first trans-Pacific free trade agreement. The objectives of both countries were different: while Chile sought to increase, diversify and add value to its exports, the Republic of Korea had a political economy objective of initiating preferential negotiations and considered Chile an ideal candidate to explore that path. This article focuses on the objectives that led Chile to sign the treaty. The effects that this has had on Chilean exports are studied, applying a method of synthetic controls to evaluate the effect of the treaty on exports with respect to the value and number of products. In addition, the impact of the treaty on the intensive and extensive margins of Chilean exports is analyzed. Although it is verified that the treaty has had a positive effect on exports, this effect is not significant for new exported products.