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On the Relationship Between RTA Expansion and Openness

  • Michele FRATIANNI


    (Indiana University, Graduate School of Business Bloomington)

  • Chang HOON HO


    (Indiana University, Kelley School of Business, Bloomington USA)

We test the relationship between the size of regional trade agreements (RTA) and openness using a gravity equation with multilateral trade factors on a large sample of 143 countries over period 1980-2003. Our sample includes eleven RTAs, seven with constant membership and four with an expanding membership. In the first group, there are more stumbling blocs than building blocs to freer global trade. In the second group, the opposite holds. We also find that regional trade bias declines with the size of the club and that three of the four expanding RTAs have already surpassed their ‘optimal’ size.

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Paper provided by Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali in its series Working Papers with number 288.

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Length: 25
Date of creation: Jun 2007
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Handle: RePEc:anc:wpaper:288
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