Impact of free trade agreements on the trade balance

This research analyzes the impact caused by the signing of a free trade agreement on Ecuadors trade balance during the period 2000-2019. Over the years it has been a topic of discussion and controversy what comes with being part of a free trade agreement. This is why it is important to know in detail and identify its true effects. Regarding the development of the research, in the first place, the calculation and analysis of the coverage rate, export coefficient and degree of openness is carried out. Then, the estimation of the econometric gravity model is carried out, applied to both the United States and the European Union. Based on the results obtained, it is shown that the variables are significant and therefore it is possible to interpret that the GDP variable is directly proportional to the flow, while the distance variable is indirect. Finally, it is concluded that free trade agreements do not have a negative impact on the Ecuadorian trade balance.