On the Relationship between RTA Expansion and Openness

26 Pages Posted: 26 Jun 2007

See all articles by Michele U. Fratianni

Michele U. Fratianni

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy; Universita' Politecnica delle Marche

Chang Hoon Oh

Simon Fraser University (SFU) - Beedie School of Business

Date Written: June 2007

Abstract

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

Fratianni, Michele and Oh, Chang Hoon, On the Relationship between RTA Expansion and Openness (June 2007). Available at SSRN: https://ssrn.com/abstract=995298 or http://dx.doi.org/10.2139/ssrn.995298

Michele Fratianni (Contact Author)

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy ( email )

Bloomington, IN 47405
United States
812-855-3360 (Phone)
812-855-3354 (Fax)

Universita' Politecnica delle Marche ( email )

Piazzale Martelli, 8
60121 Ancona
Italy
39-071-2207120 (Phone)

Chang Hoon Oh

Simon Fraser University (SFU) - Beedie School of Business ( email )

8888 University Drive
Burnaby, British Colombia V5A 1S6
Canada

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