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GVCs and the Endogenous Geography of RTAs
[Mondialisation des chaînes de valeur et la géographie endogène des accords commerciaux régionaux]

Author

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  • Lionel Fontagné

    () (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics)

  • Gianluca Santoni

    () (CEPII - Centre d'études prospectives et d'informations internationales)

Abstract

There has been considerable attention paid to the endogenous nature of regional trade agreements Geography, economic size, or common history help predicting signed agreements. However, not all signed RTAs are "natural" according to economic determinants, as trade negotiations can be used as a tool of external policy. Recent developments in terms of structural gravity help clarifying this debate by taking account of all theoretically relevant determinants of bilateral trade, as well as general equilibrium effects of signing an agreement. Indeed, the endogeneity of trade arrangements has a time dimension and is related to firm strategies. These are the two mechanisms addressed in this paper. We estimate the time-varying probability for a country pair to sign a trade agreement and build upon structural gravity in general equilibrium to determine how the patterns of Global Value Chains shape the evolving geography of optimal trade agreements. Our results confirm that the endogenous geography of RTAs is shaped by the development of GVCs.

Suggested Citation

  • Lionel Fontagné & Gianluca Santoni, 2018. "GVCs and the Endogenous Geography of RTAs
    [Mondialisation des chaînes de valeur et la géographie endogène des accords commerciaux régionaux]
    ," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01763563, HAL.
  • Handle: RePEc:hal:cesptp:hal-01763563
    Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-01763563
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    References listed on IDEAS

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    Cited by:

    1. Guillaume Gaulier & Aude Sztulman & Deniz Ünal, 2019. "Are global value chains receding? The jury is still out. Key findings from the analysis of deflated world trade in parts and components," Working Papers DT/2019/03, DIAL (Développement, Institutions et Mondialisation).

    More about this item

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration

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