Do we really know that trade agreements increase trade?

OnderzoeksoutputAcademicpeer review

49 Citaten (Scopus)


This study surveys the empirical literature in which the gravity equation has been used to study the effect of economic integration agreements (EIAs) on international trade flows. We show that most studies either focus on improving the methodology to assess regionalism’s overall impact, or on a small set of well-known agreements without necessarily adopting new methodological improvements. We bridge this gap by providing individual estimates for EIAs on world trade, while employing first-differencing techniques to correct for endogeneity bias and account for phase-in effects. Overall, EIAs promote trade by at most 50 %. Surprisingly, more than half of the EIAs investigated have had no discernible impact on trade at all, while only about one quarter of the agreements are trade promoting. Characteristics of these agreements, such as their institutional quality, design, and their members’ involvement in the World Trade Organisation, shed more light on how this variation can be understood.
Originele taal-2English
Pagina's (van-tot)443-469
Aantal pagina's27
TijdschriftReview of World Economics
Nummer van het tijdschrift3
StatusPublished - aug-2014

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