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Trade, conflicts and political integration : explaining the heterogeneity of regional trade agreements

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This paper investigates the determinants of the shape of regional trade agreements (RTAs). Because the world is constituted by independent political entities, international trade flows take place in a system where property rights are unsecured and RTAs should be understood as regulation mechanisms. In this theoretical framework, trade and security issues interact in the formation of RTAs, so that their determinants differ according to their level of political integration, defined by their ability to promote the negotiated settlement of conflicts. Empirical results confirm that countries more subject to interstate disputes and naturally more opened to trade are more likely to create politically integrated regional agreements, such as common markets or custom unions. On the contrary, international insecurity deters less integrated agreements implying a weak institutional framework, such as preferential or free trade agreements.

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Paper provided by Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne in its series Documents de travail du Centre d'Economie de la Sorbonne with number bla08022.

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Length: 38 pages
Date of creation: Mar 2008
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Handle: RePEc:mse:cesdoc:bla08022

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Keywords: International conflicts; political integration; regionalism; trade; war.;

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Cited by:
  1. Richard Baldwin & Dany Jaimovich, 2009. "Are Free Trade Agreements Contagious?," Global COE Hi-Stat Discussion Paper Series gd09-057, Institute of Economic Research, Hitotsubashi University.
  2. Seitz, Michael & Tarasov, Alexander & Zakharenko, Roman, 2013. "Trade Costs, Conflicts, and Defense Spending," Discussion Papers in Economics 15733, University of Munich, Department of Economics.
  3. Vicard, Vincent, 2011. "Determinants of successful regional trade agreements," Economics Letters, Elsevier, vol. 111(3), pages 188-190, June.
  4. Philippe Martin & Thierry Mayer & Mathias Thoenig, 2012. "The Geography of Conflicts and Regional Trade Agreements," American Economic Journal: Macroeconomics, American Economic Association, vol. 4(4), pages 1-35, October.
  5. repec:spo:wpecon:info:hdl:2441/c8dmi8nm4pdjkuc9g8m2hh491 is not listed on IDEAS
  6. Laura Márquez-Ramos & Inmaculada Martínez-Zarzoso & Celestino Suárez-Burguet, 2011. "Determinants of Deep Integration: Examining Socio-political Factors," Open Economies Review, Springer, vol. 22(3), pages 479-500, July.
  7. Mathias Thoenig & Thierry Mayer & Philippe Martin, 2010. "The geography of conflicts and free trade agreements," Sciences Po publications 7740, Sciences Po.
  8. Vincent Vicard, 2009. "On trade creation and regional trade agreements: does depth matter?," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 145(2), pages 167-187, July.

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