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Commerce and institutions: Trade, scope, and the design of regional economic organizations

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  • Yoram Haftel

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    Abstract

    The design of current regional economic organizations (REOs) is remarkably diverse. Some REOs address numerous economic issues, while others have only limited mandates. Some REOs have an independent bureaucracy and a legalized dispute settlement mechanism (DSM), while others do not. What determines this institutional variation? Thinking about these institutions as devices that generate credible commitment to a rule-based regional cooperation, institutionalists maintain that the intensity of commercial ties determine regional institutionalization and institutional independence. A number of studies question this logic and argue that it is “naïve.” Empirical evidence on the links between commerce, economic scope, and regional institutions is scant, however. Using an original data set that contains detailed information on the economic activities and institutional structure of twenty-eight REOs over three decades, this paper presents one of the first systematic analyses of these relationships. The empirical analysis indicates that the institutionalist wisdom is right after all. It shows that higher levels of regional trade are associated with greater institutionalization and economic scope, but only if implementation of signed agreements is accounted for, and that regional commerce and greater economic scope are associated with more independent bureaucracies and more legalized DSMs. Copyright Springer Science+Business Media New York 2013

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    File URL: http://hdl.handle.net/10.1007/s11558-012-9162-9
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    Article provided by Springer in its journal The Review of International Organizations.

    Volume (Year): 8 (2013)
    Issue (Month): 3 (September)
    Pages: 389-414

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    Handle: RePEc:spr:revint:v:8:y:2013:i:3:p:389-414
    Contact details of provider: Web page: http://www.springer.com

    Order Information: Web: http://www.springer.com/business/sociology/journal/11558

    Keywords: Regional economic organizations; Institutional design; Regional trade; Economic interdependence; Legalization; Implementation; F13; F53; F55;

    Find related papers by JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations
    • F55 - International Economics - - International Relations, National Security, and International Political Economy - - - International Institutional Arrangements

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    Cited by:

    1. Liesbet Hooghe & Gary Marks, 2015. "Delegation and pooling in international organizations," The Review of International Organizations, Springer, vol. 10(3), pages 305-328, September.
    2. Todd Allee & Manfred Elsig, 2016. "Why do some international institutions contain strong dispute settlement provisions? New evidence from preferential trade agreements," The Review of International Organizations, Springer, vol. 11(1), pages 89-120, March.
    3. Dreher, Axel & Mikosch, Heiner & Voigt, Stefan, 2015. "Membership has its Privileges – The Effect of Membership in International Organizations on FDI," World Development, Elsevier, vol. 66(C), pages 346-358.

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