On the Relationship between RTA Expansion and Openness
26 Pages Posted: 26 Jun 2007
Date Written: June 2007
We test the relationship between the size of regional trade agreements (RTA) and openness using a gravity equation with multilateral trade factors on a large sample of 143 countries over period 1980-2003. Our sample includes eleven RTAs, seven with constant membership and four with an expanding membership. In the first group, there are more stumbling blocs than building blocs to freer global trade. In the second group, the opposite holds. We also find that regional trade bias declines with the size of the club and that three of the four expanding RTAs have already surpassed their 'optimal' size.
Keywords: gravity equation, plurilateral RTAs, size, trade creation, trade diversion
JEL Classification: F13
Suggested Citation: Suggested Citation