Determinants of regional integration agreements in a discrete choice framework: re-examining the evidence

Laura Márquez-Ramos, Inmaculada Martínez-Zarzoso and Celestino Suárez-Burguet
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Celestino Suárez-Burguet: Departamento de Economía and Instituto de Economía Internacional, Universitat Jaume I

No 05-10, Working Papers from Asociación Española de Economía y Finanzas Internacionales

Abstract: This paper provides new empirical evidence on the determinants of regional integration agreements (RIAs) in a discrete choice modelling framework. The research has two main aims: first, to empirically analyse the determinants of different levels of integration, re-examining the evidence presented by Baier and Bergstrand (2004) in the JIE 64 (1); and second, to analyse the importance of additional factors, in particular socio-political factors. The results show that geographical factors alone are the most important explanatory factors for the probability of regional integration agreement formation or enhancement, thus supporting the theories on "natural" trading partners. The socio-political factors considered, democracy dummy, the level of economic freedom and the common language dummy are all statistically significant, although their relative importance in explaining RIA formation is low.

Keywords: Regional integration agreements; discrete choice models; trade flows; natural partners (search for similar items in EconPapers)
JEL-codes: F11 F12 F15 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2005-12
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Working Paper: Determinants of regional integration agreements in a discrete choice framework: Re-Examining the evidence
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