Exit Options and the Effectiveness of Regional Economic Organizations*

Julia Gray and Jonathan B. Slapin

Political Science Research and Methods, 2013, vol. 1, issue 2, 281-303

Abstract: Regional economic organizations (REOs) proliferate in the developed and developing world. However, there is wide variation in both their institutional structure and the degree to which they achieve their goals. This article presents a theoretical framework and empirical evidence to explain the variance in the institutional design and effectiveness of these agreements. It argues that the conditions that produce effective and broad agreements are not a function of design, but rather of exogenous factors. If countries within the REO have fewer options for world trade beyond the REO, they will develop strong institutions and make substantial use of them. This study presents a new cross-regional dataset, compiled from expert surveys, to test these arguments. It shows that expert evaluations of how well a REO functions - including its ability to meet its own goals and the ambition of those goals—hinge less on that agreement's legalization and more on the trade opportunities that REO members faced when the institution was formed.

Date: 2013
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