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

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Abstract

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

  1. 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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Correspondence to 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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Appendix

Appendix

Table 7 Countries in Analysis

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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

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