This paper assesses the ex-post effects on the international trading system of eighteen pluri-lateral regional trade agreements (RTAs) by examining their impacts on intra-bloc trade and on the tendency of members to trade with the rest of the world. This study is based on a gravity model with a solid theoretical foundation involving Anderson and van Wincoop's (2003) multilateral resistance terms. The model assesses 160 countries over a time period that extends from 1960 to 2014. Making use of the Poisson pseudo maximum likelihood (PPML) estimator and selecting the proper RTA variable and fixed effects settings, our analysis confirms the widespread trade-promoting effects of RTAs with mixed effects on extra-bloc trade. However, trade diversion in terms of bloc exports and imports are detected mostly in American and African trade agreements in many cases. By contrast, export and import creations are more prominent for RTAs in Europe and Asia.
Using a gravity model on a data set of 69 developed and developing countries over the period 1986–2006, we show that the trade‐promoting role of financial intermediation in the exporting country is mitigated when this country faces low exporting costs, that is when there is a regional trade agreement (RTA) between this country and the importing one. We also establish that this mitigating effect is reduced in financially constrained sectors, for which the role of financial intermediation remains crucial. Finally, we find evidence that the same trade‐boosting effect and the same interaction with RTAs prevail for financial intermediation in the importing country.
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