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Journal of Economic Integration 2014 March;29(1) :64-94.
Consequence of Regional Trade Agreements to Developing Countries

Craig R. MacPhee Wanasin Sattayanuwat 

Department of Economics, University of Nebraska-Lincoln, Lincoln, Nebraska, U. S. A.
School of Economics and Public Policy, Srinakharinwirot University, Bangkok, Thailand
Corresponding Author: Craig R. MacPhee ,Tel: +1 4024836594, Fax: +1 4024729700, Email:
Copyright ©2014 Journal of Economic Integration
We investigate the effects of 12 major Regional Trade Agreements (RTAs) on intraand extra-regional trade flows in member developing countries, both intra-RTA trade and the effect of RTAs on non-member trade over 1981~2008. We address and resolve statistical problems caused by logarithms, zero observations, and heteroskedasticity. Our regression results are not favorable to regional integration as a substitute for multilateral trade liberalization, although there are exceptions. Several RTAs fail to generate intrabloc trade creation. Seven of the 12 RTAs generate import trade diversion while most of the extra-bloc export dummies are not statistically significant. However, three of the five African RTAs in the sample increased intra-bloc trade. The differences in RTA performances are related to their implementation policies.

JEL Classification
F15: Economic Integration
O19: International Linkages to Development; Role of International Organizations
O57: Comparative Studies of Countries
Keywords: Regional Trade Agreements | Gravity Models | Developing Countries
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