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GTAP Resource #1936

"Are Existing Trading Blocks Building or Stumbling Blocks?"
by Rojid, Sawkut

In today’s multilateral trading system and globalization era, the number of Regional Trading Agreements (RTAs) has been steadily increasing and perhaps an irreversible feature. In one way or another, almost every country in the world forms part of an RTA. The total number of RTAs notified to the WTO currently amounts to 165 and there are many more in the process of negotiation. In the face of this phenomenon, countries not member of any RTA should fear being marginalized in trade. We study whether existing PTAs are building blocks or stumbling blocks. Our study is different from past studies on 2 aspects: first, it takes into account more countries and more years and most recent data; second, it includes two African PTAs. So far we have not come across any such studies which include African PTAs. Our estimates show that both these African PTAs- SADC and COMESA- are building blocks. Our estimates also reinforce some past studies in their conclusions on whether some PTAs are building or stumbling blocks. We also report the coefficients on the observable effects determining bilateral trade. As expect, exports of country i varies positively with the size of GDP of both importing and exporting countries. Trade is negatively related to the level of population for both importing and exporting countries indicating that large countries tend to be more self-sufficient. As expected the coefficient of the distance variable negative and significant. The bilateral trade is positively related to countries sharing a common border and language familiarity. The only variable having an unexpected sign is the real effective exchange rate.

Resource Details (Export Citation) GTAP Keywords
Category: 2006 Conference Paper
Status: Published
By/In: Presented at the 9th Annual Conference on Global Economic Analysis, Addis Ababa, Ethiopia
Created: Rojid, S. (3/26/2006)
Updated: Rojid, S. (3/26/2006)
Visits: 2,874
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