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On the Relationship Between RTA Expansion and Openness

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Author Info
Michele Fratianni (Department of Business Economics and Public Policy, Indiana University Kelley School of Business)
Chang Hoon Oh (Department of Business Economics and Public Policy, Indiana University Kelley School of Business)

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Abstract

We test the relationship between the size of regional trade agreements (RTA) and openness using a gravity equation with multilateral trade factors on a large sample of 143 countries over period 1980-2003. Our sample includes eleven RTAs, seven with constant membership and four with an expanding membership. In the first group, there are more stumbling blocs than building blocs to freer global trade. In the second group, the opposite holds. We also find that regional trade bias declines with the size of the club and that three of the four expanding RTAs have already surpassed their ‘optimal’ size.

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Publisher Info
Paper provided by Indiana University, Kelley School of Business, Department of Business Economics and Public Policy in its series Working Papers with number 2007-13.

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Date of creation: Jun 2007
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Handle: RePEc:iuk:wpaper:2007-13

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Related research
Keywords: gravity equation; plurilateral RTAs; size; trade creation; trade diversion;

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Find related papers by JEL classification:
F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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