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

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  • Yoram Haftel

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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  • Yoram Haftel, 2013. "Commerce and institutions: Trade, scope, and the design of regional economic organizations," The Review of International Organizations, Springer, vol. 8(3), pages 389-414, September.
    • Handle: RePEc:spr:revint:v:8:y:2013:i:3:p:389-414
    DOI: 10.1007/s11558-012-9162-9
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    3. Tristan Kohl & Steven Brakman & Harry Garretsen, 2016. "Do Trade Agreements Stimulate International Trade Differently? Evidence from 296 Trade Agreements," The World Economy, Wiley Blackwell, vol. 39(1), pages 97-131, January.
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    7. Klaus H. Goetz & Ronny Patz & Eugénia Heldt & Henning Schmidtke, 2017. "Measuring the Empowerment of International Organizations: The Evolution of Financial and Staff Capabilities," Global Policy, London School of Economics and Political Science, vol. 8, pages 51-61, August.
    8. Yoram Z. Haftel & Tobias Lenz, 2022. "Measuring institutional overlap in global governance," The Review of International Organizations, Springer, vol. 17(2), pages 323-347, April.
    9. 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.
    10. Markus Gastinger & Andreas Dür, 2021. "Joint bodies in the European Union's international agreements: Delegating powers to the European Commission in EU external relations," European Union Politics, , vol. 22(4), pages 611-630, December.
    11. Baccini, Leonardo & Dür, Andreas & Elsig, Manfred, 2015. "The politics of trade agreement design: revisiting the depth-flexibility nexus," LSE Research Online Documents on Economics 62303, London School of Economics and Political Science, LSE Library.
    12. Rana Arslan Tariq, 2015. "Trade and Conflicts: Do Preferential Trade Agreements Matter?," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 21(4), pages 561-574, December.
    13. Fabio Franchino & Camilla Mariotto, 2021. "Noncompliance risk, asymmetric power and the design of enforcement of the European economic governance," European Union Politics, , vol. 22(4), pages 591-610, December.
    14. Yoram Z. Haftel & Stephanie C. Hofmann, 2019. "Rivalry and Overlap: Why Regional Economic Organizations Encroach on Security Organizations," Journal of Conflict Resolution, Peace Science Society (International), vol. 63(9), pages 2180-2206, October.
    15. Libman, Alexander & Vinokurov, Evgeny, 2016. "Региональные Организации: Типы И Логика Развития [Regional Organizations: Typology and Development Paths]," MPRA Paper 79383, University Library of Munich, Germany.
    16. Henning Schmidtke & Tobias Lenz, 2024. "Expanding or defending legitimacy? Why international organizations intensify self-legitimation," The Review of International Organizations, Springer, vol. 19(4), pages 753-784, October.
    17. Leslie Johns, 2014. "Depth versus rigidity in the design of international trade agreements," Journal of Theoretical Politics, , vol. 26(3), pages 468-495, July.
    18. Diana Panke, 2020. "Regional cooperation through the lenses of states: Why do states nurture regional integration?," The Review of International Organizations, Springer, vol. 15(2), pages 475-504, April.
    19. Soo Yeon Kim, 2021. "Investment commitments in PTAs and MNCS in partner countries," Economics and Politics, Wiley Blackwell, vol. 33(3), pages 415-442, November.
    20. Zürn, Michael & Tokhi, Alexandros & Binder, Martin, 2021. "The International Authority Database," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 12(4), pages 430-442.
    21. Jon CW Pevehouse & Timothy Nordstrom & Roseanne W McManus & Anne Spencer Jamison, 2020. "Tracking organizations in the world: The Correlates of War IGO Version 3.0 datasets," Journal of Peace Research, Peace Research Institute Oslo, vol. 57(3), pages 492-503, May.
    22. Lee, Jiwon & Wittgenstein, Teresa, 2017. "Weak vs. Strong Ties: Explaining Early Settlement in WTO Disputes," ILE Working Paper Series 7, University of Hamburg, Institute of Law and Economics.

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    More about this item

    Keywords

    Regional economic organizations; Institutional design; Regional trade; Economic interdependence; Legalization; Implementation; F13; F53; F55;
    All these keywords.

    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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