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Why Do Countries Form Regional Trade Agreements? A Discrete-Time Survival Analysis

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  • Teresa L. Cyrus

    (Dalhousie University)

Abstract

This paper seeks to determine why countries form regional trade agreements. Using bilateral data from 1950 to 2013 for 468 trade agreements and 179 countries, I use survival analysis to examine the factors that determine the likelihood of two countries entering into a trade agreement at any point in time. Potential explanatory variables include prior trade flows, export distance, GDP, per-capita GDP, geography, culture, and institutions. The results show that trade, per-capita GDP, and similarities in culture and institutions increase the likelihood that two countries will form a regional trade agreement. Larger, more distant, and more isolated countries are less likely to form an RTA, as are country-pairs that are different in size.

Suggested Citation

  • Teresa L. Cyrus, 2021. "Why Do Countries Form Regional Trade Agreements? A Discrete-Time Survival Analysis," Open Economies Review, Springer, vol. 32(2), pages 417-434, April.
    • Handle: RePEc:kap:openec:v:32:y:2021:i:2:d:10.1007_s11079-020-09603-5
    DOI: 10.1007/s11079-020-09603-5
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    More about this item

    Keywords

    Trade; Regional trade agreements; Duration; Survival;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy

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