Why Some Regional Trade Agreements Work: Private Rents, Exit Options, and Legalization
Regional trade agreements (RTAs) proliferate in the developed and developing world. However, there is wide variation in both the institutional structure of these RTAs and the degree to which they achieve their goals. Particularly in the developing world, RTA dispute-settlement mechanisms are formed but rarely employed; ambitious tari cuts are announced but never implemented; and promised trade ows do not quite materialize. Yet the study of these agreements has been mostly limited to their trade-enhancing e ects. Moreover, empirical researchers tend to treat all RTAs as like units. What accounts for the di erent levels of not only \thick" institutional design, but also of implementation of that design | since the two are at times scarcely correlated? We present a theoretical framework as well as empirical evidence to explain the de facto as well as the de jure institutional design of these agreements. We argue that the conditions that produce e ective and broad agreements are not a function of endogenous design, but rather of exogenous factors. If countries within the RTA have fewer options for world trade beyond the RTA, they will almost always develop strong institutions, such as mechanisms for dispute settlement, and make substantial use of them. Similarly, environments where member states are accustomed to using the public sector as a source of private rents, such as employment opportunities, will create broad agreements that are high in scope. We present a new cross-regional dataset, compiled from expert surveys, to test these arguments.
|Date of creation:||05 2009|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: 00 353 1 896 3888
Fax: 00 353 1 896 3939
Web page: http://www.tcd.ie/iiis/
More information through EDIRC
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.:
- Alter, Karen J., 1998. "Who Are the “Masters of the Treaty”?: European Governments and the European Court of Justice," International Organization, Cambridge University Press, vol. 52(01), pages 121-147, December.
- Alberto Alesina & Enrico Spolaore & Romain Wacziarg, 1997.
"Economic Integration and Political Disintegration,"
NBER Working Papers
6163, National Bureau of Economic Research, Inc.
- Wacziarg, Romain & Alesina, Alberto, 1998.
"Openness, Country Size and Government,"
4553014, Harvard University Department of Economics.
- Rosenthal, Howard & Voeten, Erik, 2007. "Measuring legal systems," Journal of Comparative Economics, Elsevier, vol. 35(4), pages 711-728, December.
- Busch, Marc L., 2007. "Overlapping Institutions, Forum Shopping, and Dispute Settlement in International Trade," International Organization, Cambridge University Press, vol. 61(04), pages 735-761, October.
- Jenna Bednar, 2007. "Valuing Exit Options," Publius: The Journal of Federalism, Oxford University Press, vol. 37(2), pages 190-208, Spring.
- Michele Fratianni & John Pattison, 2001. "International Organisations in a World of Regional Trade Agreements: Lessons from Club Theory," The World Economy, Wiley Blackwell, vol. 24(3), pages 333-358, 03.
- Arvind Panagariya, 2003.
"The Regionalism Debate: An Overview,"
- Mansfield, Edward D. & Reinhardt, Eric, 2008. "International Institutions and the Volatility of International Trade," International Organization, Cambridge University Press, vol. 62(04), pages 621-652, October.
- Crawford, Jo-Ann & Fiorentino, Roberto V., 2005. "The changing landscape of regional trade agreements," WTO Discussion Papers 8, World Trade Organization (WTO), Economic Research and Statistics Division.
- Roland Vaubel & Axel Dreher & Uğurlu Soylu, 2007.
"Staff growth in international organizations: A principal-agent problem? An empirical analysis,"
Springer, vol. 133(3), pages 275-295, December.
- Roland Vaubel & Axel Dreher & Ugurlu Soylu, 2003. "Staff Growth in International Organizations: A Principal-Agent Problem? An Empirical Analysis," Public Economics 0306006, EconWPA, revised 08 Jul 2003.
- Chad P. Bown & Bernard M. Hoekman, 2005. "WTO Dispute Settlement and the Missing Developing Country Cases: Engaging the Private Sector," Journal of International Economic Law, Oxford University Press, vol. 8(4), pages 861-890, December.
- Bhagwati, Jagdish & Greenaway, David & Panagariya, Arvind, 1998. "Trading Preferentially: Theory and Policy," Economic Journal, Royal Economic Society, vol. 108(449), pages 1128-48, July.
- Anne O. Krueger, 1999. "Are Preferential Trading Arrangements Trade-Liberalizing or Protectionist?," Journal of Economic Perspectives, American Economic Association, vol. 13(4), pages 105-124, Fall.
When requesting a correction, please mention this item's handle: RePEc:iis:dispap:iiisdp289. 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: (Colette Keleher)
If references are entirely missing, you can add them using this form.