Regional Trade Agreements and the Pattern of Trade: A Networks Approach

36 Pages Posted: 23 May 2009 Last revised: 1 Mar 2014

See all articles by Javier A. Reyes

Javier A. Reyes

University of Arkansas - Sam M. Walton College of Business

Rossitza B. Wooster

Portland State University

Stuart Shirrell

IDinsight

Multiple version iconThere are 2 versions of this paper

Date Written: May 22, 2009

Abstract

This paper uses a complex network approach for the analysis of bilateral trade data between countries over the period 1970-2000. We compute the network community structure for every year between 1970 and 2000 and compare it to null community structures that emerge from various models based on regional and geographic classifications, the implementation of RTA's and/or on gravity models of trade. Our results show that RTA formation appears to have a cyclical pattern on the world trade network community structure. We document periods where bilateral trade flows and the structure of the world trade network are consistent with those predicted by formation of RTAs. These cycles occur in 1980-86 and 1990-96. Conversely, we also find periods in which the pattern in the world trade network is not explained by RTA formation. Two periods, 1986-1990 and 1997-2000, show a pattern of bilateral trade flows that moves away from the prediction that results from assuming RTA-formation as the driving force in the determination of the world trade network structure. Factors contributing to the latter parts of the cycle we document may be due to the growing role of foreign investment and decreased trade costs over the sample period.

Keywords: International Trade Flows, Regional Trade Agreements, Complex Networks

JEL Classification: F1, F15, C61

Suggested Citation

Reyes, Javier A. and Wooster, Rossitza B. and Shirrell, Stuart, Regional Trade Agreements and the Pattern of Trade: A Networks Approach (May 22, 2009). Available at SSRN: https://ssrn.com/abstract=1408784 or http://dx.doi.org/10.2139/ssrn.1408784

Javier A. Reyes

University of Arkansas - Sam M. Walton College of Business ( email )

2 East Center Street
University of Arkansas
Fayetteville, AR 72701
United States
479-575-6079 (Phone)

HOME PAGE: http://economics.uark.edu/directory.php?id=reyes

Rossitza B. Wooster (Contact Author)

Portland State University ( email )

Department of Economics
P.O.Box 751
Portland, OR 97207
United States
503.725.3944 (Phone)
503.725.3945 (Fax)

HOME PAGE: http://web.pdx.edu/~wooster/

Stuart Shirrell

IDinsight ( email )

New York, NY
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
224
Abstract Views
1,680
rank
152,774
PlumX Metrics