Is the Growth of Regionalism as Significant as the Headlines Suggest? Lessons from Agricultural Trade

The proliferation of regional trade agreements (RTAs) has motivated a significant number of ex post econometric studies investigating their agricultural trade impacts. The general conclusion is that RTAs increase members’ trade by as much as 150 percent, on average. In this article, we demonstrate that previous empirical work likely misrepresents the impact of RTAs because of considerable heterogeneity in the depth of economic integration pursued by these agreements. Contrary to previous studies, the results reveal that RTAs are not universally trade creating, and some agreements appear to provide very little benefit. “Deep integration agreements”, on the other hand, are largely responsible for the impressive agricultural trade flow increases reported in the literature. Testing the hierarchy of RTAs largely confirms the theory: the benefits of regionalism are an increasing function of the depth of economic integration.


Issue Date:
2012-10
Publication Type:
Working or Discussion Paper
PURL Identifier:
http://purl.umn.edu/142374
Total Pages:
39
Series Statement:
CATPRN Working Paper
2012-06




 Record created 2017-04-01, last modified 2017-08-26

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