Multilateralism versus Regionalism!?
The well-known question whether regional trade agreements (RTAs) and the multilateral trading system (MTS) are "strangers, friends, or foes" (Bhagwati and Panagariya, 1996) has gained new importance with the widespread proliferation of RTAs in recent years. Based on an extensive data set which covers most of world trade over the past 60 years and about 240 regional trade agreements, we analyze the relationship between RTAs and the MTS by combining the gravity model framework with vector auto-regression analysis. Impulse-response-functions robustly suggest that multilateral trade liberalization responds in a signifcantly positive way to regional trade liberalization. We also find robust evidence that RTA liberalization Granger-causes GATT/WTO liberalization. Thus, our results indicate that RTAs do not undermine the MTS but serve as building blocs to multilateral trade liberalization.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Joao Santos Silva & Silvana Tenreyro, 2005.
"The Log of Gravity,"
CEP Discussion Papers
dp0701, Centre for Economic Performance, LSE.
- Santos Silva, J.M.C & Tenreyro, Silvana, 2005. "The Log of Gravity," CEPR Discussion Papers 5311, C.E.P.R. Discussion Papers.
- Joao Santos Silva & Silvana Tenreyro, 2005. "The log of gravity," LSE Research Online Documents on Economics 3744, London School of Economics and Political Science, LSE Library.
- Richard Pomfret, 2005.
"Regional Trade Agreements,"
- C. Fred Bergsten, 1997.
Working Paper Series
WP97-3, Peterson Institute for International Economics.
- Boriss Siliverstovs & Dieter Schumacher, 2009.
"Estimating gravity equations: to log or not to log?,"
Springer, vol. 36(3), pages 645-669, June.
- Boriss Siliverstovs & Dieter Schumacher, 2007. "Estimating Gravity Equations: To Log or Not to Log?," Discussion Papers of DIW Berlin 739, DIW Berlin, German Institute for Economic Research.
- Trejos Alberto, 2005. "Bilateral and Regional Free Trade Agreements, and Their Relationship with the WTO and the Doha Development Agenda," Global Economy Journal, De Gruyter, vol. 5(4), pages 1-11, December.
- Joakim Westerlund & Fredrik Wilhelmsson, 2009. "Estimating the gravity model without gravity using panel data," Applied Economics, Taylor & Francis Journals, vol. 43(6), pages 641-649.
- Antoni Estevadeordal & Caroline Freund & Emanuel Ornelas, 2008.
"Does Regionalism Affect Trade Liberalization Towards Non-Members?,"
CEP Discussion Papers
dp0868, Centre for Economic Performance, LSE.
- Antoni Estevadeordal & Caroline Freund & Emanuel Ornelas, 2008. "Does Regionalism Affect Trade Liberalization toward NonMembers?," The Quarterly Journal of Economics, MIT Press, vol. 123(4), pages 1531-1575, November.
- Estevadeordal, Antoni & Freund, Caroline & Ornelas, Emanuel, 2008. "Does regionalism affect trade liberalization toward non-members ?," Policy Research Working Paper Series 4751, The World Bank.
- Antoni Estevadeordal & Caroline Freund & Emanuel Ornelas, 2008. "Does regionalism affect trade liberalization towards non-members?," LSE Research Online Documents on Economics 19584, London School of Economics and Political Science, LSE Library.
- Nuno Limão, 2002.
"Are Preferential Trade Agreements with Non-trade Objectives a Stumbling Bloc for Multilateral Liberalization?,"
- Lim“o, Nuno, 2002. "Are Preferential trade Agreements with Non-trade Objectives a Stumbling Block for Multilateral Liberalization?," Royal Economic Society Annual Conference 2002 129, Royal Economic Society.
- James E. Anderson & Eric van Wincoop, 2000.
"Gravity with Gravitas: A Solution to the Border Puzzle,"
Boston College Working Papers in Economics
485, Boston College Department of Economics.
- 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.
- James E. Anderson & Eric van Wincoop, 2001. "Gravity with Gravitas: A Solution to the Border Puzzle," NBER Working Papers 8079, National Bureau of Economic Research, Inc.
- Michael Tomz & Judith L. Goldstein & Douglas Rivers, 2007. "Do We Really Know That the WTO Increases Trade? Comment," American Economic Review, American Economic Association, vol. 97(5), pages 2005-2018, December.
- Arvind Subramanian & Shang-Jin Wei, 2003.
"The WTO Promotes Trade, Strongly But Unevenly,"
NBER Working Papers
10024, National Bureau of Economic Research, Inc.
- Arvind Panagariya, 1999.
"The Regionalism Debate: An Overview,"
The World Economy,
Wiley Blackwell, vol. 22(4), pages 477-512, 06.
- Daniel J. Henderson & Daniel L. Millimet, 2008.
"Is gravity linear?,"
Journal of Applied Econometrics,
John Wiley & Sons, Ltd., vol. 23(2), pages 137-172.
- Lim, Jamus Jerome & Decker, Jessica Henson, 2007.
"Democracy and Trade: An Empirical Study,"
6077, University Library of Munich, Germany.
- P. Magee, Stephen & Lee, Hak-Loh, 2001. "Endogenous tariff creation and tariff diversion in a customs union," European Economic Review, Elsevier, vol. 45(3), pages 495-518, March.
- Bergstrand, Jeffrey H, 1985. "The Gravity Equation in International Trade: Some Microeconomic Foundations and Empirical Evidence," The Review of Economics and Statistics, MIT Press, vol. 67(3), pages 474-81, August.
- Richard Pomfret, 2007.
"Is Regionalism an Increasing Feature of the World Economy?,"
The World Economy,
Wiley Blackwell, vol. 30(6), pages 923-947, 06.
- Richard Pomfret, 2006. "Is Regionalism an Increasing Feature of the World Economy?," The Institute for International Integration Studies Discussion Paper Series iiisdp164, IIIS.
- Nuno Limao, 2006. "Preferential Trade Agreements as Stumbling Blocks for Multilateral Trade Liberalization: Evidence for the United States," American Economic Review, American Economic Association, vol. 96(3), pages 896-914, June.
When requesting a correction, please mention this item's handle: RePEc:bav:wpaper:089_herz. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Rebecca Hartschen)
If references are entirely missing, you can add them using this form.