Impact of Membership in Regional Trade Agreements on International Trade

Abstract

In this paper the impact of membership in 16 RTAs on trade is analysed, both among the member states and with the rest of the world. The analysis covers the period 2000-2010. The gravity approach is used with standard variables (e.g. GDPs of the trading partners, as well as the geographic and economic distance between them), supplemented with variables relating to membership in regional trading agreements (RTAs). In this paper - differently than in the literature - several variables for participation in RTAs are used, rather than just one dummy variable. The remainder of the paper is organized as follows. In the first part the basic data of these RTAs, which are later tested empirically, are commented on. In the second part the most important conclusions from the literature on the impact of RTA membership on international trade are analysed. The results of previous empirical studies are discussed as well. In the third part the methodology used in the empirical test is described. The fourth part contains empirical analyses and conclusions, and the paper ends with some final remarks.