Abstract
ABSTRACTThis paper extends the literature on the determinants of free trade area (FTA) taking hub‐and‐spoke status and hub status‐seeking into account. The analysis is based on purely cross‐sectional data and the main findings are different from previous studies. First, the hub‐and‐spoke status and hub status‐seeking are two important determinants of FTA. Moreover, the hub‐and‐spoke status and hub status‐seeking have greater partial effects on the response probabilities than other determinants. Second, the probability of forming an FTA between a pair of economies is higher if they share a common language. Finally, the probability of forming an FTA between a pair of economies falls at first but eventually increases as the difference in their relative factor endowments increases.
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