Alliances, Preferential Trading Arrangements, and lnternational Trade

Edward D. Mansfield and Rachel Bronson

Chapter 4 in The Political Economy of International Trade, 2015, pp 51-64 from World Scientific Publishing Co. Pte. Ltd.

Abstract: We analyze the effects of alliances and preferential trading arrangements on bilateral trade flows. Both factors are likely to promote trade among members, but we argue that the interaction between them is central to explaining patterns of commerce. The combination of an alliance, which creates political incentives for participants to engage in trade, and a commercial institution, which liberalizes trade among members, is expected to provide a considerable impetus to commerce among parties to both. The results of our quantitative analyses support these arguments. Both alliances and preferential trading arrangements strongly affected trade from 1960 to 1990, and allies that included a major power conducted considerably more trade than their nonmajor-power counterparts. Moreover, the interaction between alliances and preferential trading arrangements is fundamental to explaining patterns of bilateral commerce: Parties to a common preferential trading arrangement and a common alliance engage in markedly greater trade than do members of either type of institution but not both…

Keywords: Political Economy; International Trade; Globalization (search for similar items in EconPapers)
Date: 2015
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