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Development of trade blocs in an era of globalization: Proximity still matters

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  • Aleid Brouwer

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  • Tristan Kohl

Abstract

This article describes the development of international trade blocs world wide from the 1950s till 2010. We updated the data on international trade flows and introduced a new trade bloc variable based on the intramax hierarchical clustering technique, which defines trade blocs on actual trade intensities and not - as was preciously done - by traditional geographic and political factors: such as the division into a triad of economic regions based on North America, the European Union and Japan. Nevertheless, the results of intramax hierarchical clustering indicate that actual trade flows are very much influenced by geographical and political factors; after all, proximity matters. To explain how mechanism of globalization changed trade patterns over the last half century and how - in the end - proximity is one of the most explanatory variables - we furthermore apply multivariate analysis with gravity-model based variables aims to explain which geographical, political and cultural factors do contribute to the (importance of) proximity in trade partners. In addition we also apply GIS to analyze patterns and proximity issues.

Suggested Citation

  • Aleid Brouwer & Tristan Kohl, 2011. "Development of trade blocs in an era of globalization: Proximity still matters," ERSA conference papers ersa11p122, European Regional Science Association.
  • Handle: RePEc:wiw:wiwrsa:ersa11p122
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    File URL: http://www-sre.wu.ac.at/ersa/ersaconfs/ersa11/e110830aFinal00121.pdf
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    References listed on IDEAS

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    1. Head, Keith & Mayer, Thierry & Ries, John, 2010. "The erosion of colonial trade linkages after independence," Journal of International Economics, Elsevier, vol. 81(1), pages 1-14, May.
    2. Frankel, Jeffrey & Stein, Ernesto & Wei, Shang-jin, 1995. "Trading blocs and the Americas: The natural, the unnatural, and the super-natural," Journal of Development Economics, Elsevier, vol. 47(1), pages 61-95, June.
    3. James Faulconbridge, 2007. "Global shift. Mapping the changing contours of the world economy (5th edition)," Journal of Economic Geography, Oxford University Press, vol. 7(6), pages 599-779, November.
    4. Miren Lafourcade & Elisenda Paluzie, 2011. "European Integration, Foreign Direct Investment (FDI), and the Geography of French Trade," Regional Studies, Taylor & Francis Journals, vol. 45(4), pages 419-439.
    5. I Masser & P J B Brown, 1975. "Hierarchical Aggregation Procedures for Interaction Data," Environment and Planning A, , vol. 7(5), pages 509-523, August.
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