Quality of Governance and the Formation of Preferential Trade Agreements

Masahiro Endoh

Review of International Economics, 2006, vol. 14, issue 5, 758-772

Abstract: This paper investigates economic and political factors which explain the presence or absence of preferential trade agreements (PTAs). A model of three countries with imperfect competition markets is employed for theoretical analysis of political economy. The validity of theoretical results is tested by econometric analysis with a logit model. It is shown that countries with similar incomes are more likely to form PTAs, and that governments with low quality of governance have little incentive to form PTAs.

Date: 2006
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