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On the Relationship Between RTA Expansion and Openness

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  • Michele FRATIANNI

    (Indiana University, Graduate School of Business Bloomington)

  • Chang HOON HO

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

Abstract

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.

Suggested Citation

  • Michele FRATIANNI & Chang HOON HO, 2007. "On the Relationship Between RTA Expansion and Openness," Working Papers 288, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  • Handle: RePEc:anc:wpaper:288
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    2. Luca RICCETTI, 2011. "A Copula-GARCH Model for Macro Asset Allocation of a Portfolio with Commodities: an Out-of-Sample Analysis," Working Papers 355, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    3. Oh, Chang Hoon & Selmier II, W. Travis, 2008. "Expanding international trade beyond the RTA border: The case of ASEAN's economic diplomacy," Economics Letters, Elsevier, vol. 100(3), pages 385-387, September.
    4. Estrella Gómez-Herrera, 2013. "Comparing alternative methods to estimate gravity models of bilateral trade," Empirical Economics, Springer, vol. 44(3), pages 1087-1111, June.
    5. Sunder Ramaswamy & Abishek Choutagunta & Santhosh K. Sahu, 2016. "Evaluating Asian FTAs: What do Gravity Equation Models Tell Us?," Working Papers id:11377, eSocialSciences.
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    7. Giulia Bettin & Alessia Lo Turco, 2012. "A Cross-Country View on South-North Migration and Trade: Dissecting the Channels," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 48(4), pages 4-29, July.
    8. Fabio FIORILLO & Agnese SACCHI, 2010. "I Want to Free-ride. An Opportunistic View on Decentralization Versus Centralization Problem," Working Papers 346, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
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    10. Nnanna P. Azu & Benedette Nneka Okezie & Amatus Hirwa, 2019. "Gravity Perspective of Trade Realignment: Assessing China’s Engagement in West Africa," Global Journal of Emerging Market Economies, Emerging Markets Forum, vol. 11(3), pages 165-182, September.
    11. Natalia Drzewoszewska, 2014. "Searching for the Appropriate Measure of Multilateral Trade-Resistance Terms in the Gravity Model of Bilateral Trade Flows," Dynamic Econometric Models, Uniwersytet Mikolaja Kopernika, vol. 14, pages 29-49.
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    More about this item

    Keywords

    gravity equation; plurilateral RTAs; size; trade creation; trade diversion;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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