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The Impact of Integration on International Trade Flows: the Cases of EU, OIC & ECO

Mehdi Raissi and Bahare Teimoori
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Bahare Teimoori: Ph.D. Student in Economics, University of Isfahan, Iran

Iranian Economic Review (IER), 2006, vol. 11, issue 2, 111-127

Abstract: The growth of regional trade blocks has been one of the major developments in international relations in recent years. Regional agreements vary widely but, all have the objective of reducing barriers to trade between member countries that in most cases result in increasingly trade flows and economic growth. This paper attempts to explore the results of trade integration in ECO, EU and OIC blocks. For this purpose a “Gravity Panel Data Model” is specified to test the hypothesis in which economic integration among countries can expand trade flows. Accordingly, three types of models are to employ to explain the trade integration between all ECO, OIC, EU members and their major trading partners. The empirical results show that the three regional trade arrangements create trade and increase welfare for the participants. Another result of the study demonstrates that both rich and poor countries within those RTA’s could reap the benefits of integration, even though their economic and social structures are heterogeneous and different.

Keywords: Economic Integration; Gravity Model; Panel Data; Fixed Effects; and Random Effects Model. (search for similar items in EconPapers)
Date: 2006
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