Why Do Countries Form Regional Trade Agreements? A Discrete-Time Survival Analysis

This paper seeks to determine why countries form regional trade agreements. Using bilateral data from 1950 to 2013 for 468 trade agreements and 179 countries, I use survival analysis to examine the factors that determine the likelihood of two countries entering into a trade agreement at any point in time. Potential explanatory variables include prior trade flows, export distance, GDP, per-capita GDP, geography, culture, and institutions. The results show that trade, per-capita GDP, and similarities in culture and institutions increase the likelihood that two countries will form a regional trade agreement. Larger, more distant, and more isolated countries are less likely to form an RTA, as are country-pairs that are different in size.

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Notes

See https://www.wto.org/english/tratop_e/region_e/region_e.htm for descriptions of the different types of regional trade agreements.

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1. Department of Economics, Dalhousie University, Halifax, NS, B3H 4R2, Canada Teresa L. Cyrus

1. Teresa L. Cyrus

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Note: The author thanks the editor and two anonymous referees for very helpful comments and suggestions.

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Cyrus, T.L. Why Do Countries Form Regional Trade Agreements? A Discrete-Time Survival Analysis. Open Econ Rev 32, 417–434 (2021). https://doi.org/10.1007/s11079-020-09603-5

• Published : 15 September 2020
• Issue Date : April 2021
• DOI : https://doi.org/10.1007/s11079-020-09603-5

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