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Playing Dominoes in Europe: An Empirical Analysis of the Domino Theory for the EU, 1962-2004

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Author Info
Roland Rieder () (IUHEI, The Graduate Institute of International Studies, Geneva)
Abstract

This paper addresses the question whether the domino theory of regionalism is a reasonable explanation for the growth in EU membership over the past forty years. In essence, this theory states that the conclusion of a new regional trade agreement or the deepening of an existing one will induce non-members to join the trade bloc. The empirical analysis proceeds in two stages. First, a gravity analysis shows that the EU was more attractive than EFTA since it triggered a higher degree of trade diversion. In a second step, a discrete choice model is used to assess the importance of variables reflecting domino effects relative to other possible determinants of EU expansion. The findings provide convincing evidence in support of the domino theory.

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Paper provided by Economics Section, The Graduate Institute of International Studies in its series HEI Working Papers with number 11-2006.

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Length: 47
Date of creation: May 2006
Date of revision: Jun 2006
Handle: RePEc:gii:giihei:heiwp11-2006

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Related research
Keywords: Regional trade agreements Western Europe gravity equation panel econometrics qualitative choice models

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Find related papers by JEL classification:
C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data
C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models
F15 - International Economics - - Trade - - - Economic Integration

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  3. Melanie Leiner-Killinger & Christophe Madaschi & Melanie Ward-Warmedinger, 2005. "What does European institutional integration tell us about trade integration?," Occasional Paper Series 41, European Central Bank. [Downloadable!]
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  13. Egger, Peter, 2000. "A note on the proper econometric specification of the gravity equation," Economics Letters, Elsevier, vol. 66(1), pages 25-31, January. [Downloadable!] (restricted)
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  14. Bergstrand, Jeffrey H, 1989. "The Generalized Gravity Equation, Monopolistic Competition, and the Factor-Proportions Theory in International Trade," The Review of Economics and Statistics, MIT Press, vol. 71(1), pages 143-53, February. [Downloadable!] (restricted)
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  17. Christopher Magee, 2003. "Endogenous Preferential Trade Agreements: An Empirical Analysis," Contributions to Economic Analysis & Policy, Berkeley Electronic Press, vol. 2(1), pages 1166-1166. [Downloadable!] (restricted)
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  20. Laszlo Matyas, 1997. "Proper Econometric Specification of the Gravity Model," The World Economy, Blackwell Publishing, vol. 20(3), pages 363-368, 05. [Downloadable!] (restricted)
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