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On the Relationship Between RTA Expansion and Openness

Michele Fratianni () and Chang Hoon Oh

No 2007-13, Working Papers from Indiana University, Kelley School of Business, Department of Business Economics and Public Policy

Abstract: We test the relationship between the size of regional trade agreements (RTA) and openness using a gravity equation with multilateral trade factors on a large sample of 143 countries over period 1980-2003. Our sample includes eleven RTAs, seven with constant membership and four with an expanding membership. In the first group, there are more stumbling blocs than building blocs to freer global trade. In the second group, the opposite holds. We also find that regional trade bias declines with the size of the club and that three of the four expanding RTAs have already surpassed their ‘optimal’ size.

Keywords: gravity equation; plurilateral RTAs; size; trade creation; trade diversion (search for similar items in EconPapers)
JEL-codes: F13 (search for similar items in EconPapers)
Date: 2007-06
New Economics Papers: this item is included in nep-int
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