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The Impact of Integration on International Trade Flows: the Cases of EU, OIC & ECO

Author

Listed:
  • Mehdi Raissi

    () (Ph.D. Student in Economics, University of Essex, UK)

  • Bahare Teimoori

    (Ph.D. Student in Economics, University of Isfahan, Iran)

Abstract

The growth of regional trade blocks has been one of the major developments in international relations in recent years. Regional agreements vary widely but, all have the objective of reducing barriers to trade between member countries that in most cases result in increasingly trade flows and economic growth. This paper attempts to explore the results of trade integration in ECO, EU and OIC blocks. For this purpose a “Gravity Panel Data Model” is specified to test the hypothesis in which economic integration among countries can expand trade flows. Accordingly, three types of models are to employ to explain the trade integration between all ECO, OIC, EU members and their major trading partners. The empirical results show that the three regional trade arrangements create trade and increase welfare for the participants. Another result of the study demonstrates that both rich and poor countries within those RTA’s could reap the benefits of integration, even though their economic and social structures are heterogeneous and different.

Suggested Citation

  • Mehdi Raissi & Bahare Teimoori, 2006. "The Impact of Integration on International Trade Flows: the Cases of EU, OIC & ECO," Iranian Economic Review (IER), Faculty of Economics,University of Tehran.Tehran,Iran, vol. 11(2), pages 111-127, spring.
  • Handle: RePEc:eut:journl:v:11:y:2006:i:2:p:111
    as

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    References listed on IDEAS

    as
    1. 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 143-153, February.
    2. Bougheas, Spiros & Demetriades, Panicos O. & Morgenroth, Edgar L. W., 1999. "Infrastructure, transport costs and trade," Journal of International Economics, Elsevier, vol. 47(1), pages 169-189, February.
    3. Egger, Peter, 2000. "A note on the proper econometric specification of the gravity equation," Economics Letters, Elsevier, vol. 66(1), pages 25-31, January.
    4. Anderson, James E, 1979. "A Theoretical Foundation for the Gravity Equation," American Economic Review, American Economic Association, vol. 69(1), pages 106-116, March.
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