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Unilateral Liberalization versus Regional Integration: The Case of ECO Member Countries

Author

Listed:
  • Jahangir Khan Achakzai

    () (Department of Economics, University of Balochistan, Quetta, Pakistan.)

Abstract

Using an international dataset on bilateral trade for 137 countries in 2005, we estimate a gravity model to address the question of whether intra-Economic Cooperation Organization (ECO) trade is too low and whether the scale of trade at present is accounted for by regional integration or unilateral liberalization. The results of the gravity model confirm that intra-regional trade is lower than predicted by the gravity equation. The results also validates the theory that the present level of trade is attributed to regional agreements rather than unilateral liberalization, suggesting greater scope for regional cooperation among ECO member countries.

Suggested Citation

  • Jahangir Khan Achakzai, 2010. "Unilateral Liberalization versus Regional Integration: The Case of ECO Member Countries," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 15(1), pages 27-44, Jan-Jun.
  • Handle: RePEc:lje:journl:v:15:y:2010:i:1:p:27-44
    as

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    References listed on IDEAS

    as
    1. Brada, Josef C & Mendez, Jose A, 1985. "Economic Integration among Developed, Developing and Centrally Planned Economies: A Comparative Analysis," The Review of Economics and Statistics, MIT Press, vol. 67(4), pages 549-556, November.
    2. Soloaga, Isidro & Alan Wintersb, L., 2001. "Regionalism in the nineties: what effect on trade?," The North American Journal of Economics and Finance, Elsevier, vol. 12(1), pages 1-29, March.
    3. James E. Anderson & Eric van Wincoop, 2003. "Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, American Economic Association, vol. 93(1), pages 170-192, March.
    4. Dani Rodrik, 1992. "The Rush to Free Trade in the Developing World: Why So Late? Why Now? Will it Last?," NBER Working Papers 3947, National Bureau of Economic Research, Inc.
    5. McCallum, John, 1995. "National Borders Matter: Canada-U.S. Regional Trade Patterns," American Economic Review, American Economic Association, vol. 85(3), pages 615-623, June.
    6. Deardoff, A.V., 1995. "Determinants of Bilateral Trade: Does Gravity Work in a Neoclassical World?," Working Papers 382, Research Seminar in International Economics, University of Michigan.
    7. repec:fth:michin:382 is not listed on IDEAS
    8. Fernandez, Raquel, 1997. "Returns to regionalism : an evaluation of nontraditional gains from regional trade agreements," Policy Research Working Paper Series 1816, The World Bank.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Bilateral trade; economic cooperation organization; regionalism.;

    JEL classification:

    • N70 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - General, International, or Comparative
    • P45 - Economic Systems - - Other Economic Systems - - - International Linkages

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