Regional Trading Blocs Research Articles

Globalization and Contemporary Fertility Convergence.

The rise of the global network of nation-states has precipitated social transformations throughout the world. This article examines the role of political and economic globalization in driving fertility convergence across countries between 1965 and 2009. While past research has typically conceptualized fertility change as a country-level process, this study instead employs a theoretical and methodological framework that examines differences in fertility between pairs of countries over time. Convergence in fertility between pairs of countries is hypothesized to result from increased cross-country connectedness and cross-national transmission of fertility-related schemas. I investigate the impact of various cross-country ties, including ties through bilateral trade, intergovernmental organizations, and regional trade blocs, on fertility convergence. I find that globalization acts as a form of social interaction to produce fertility convergence. There is significant heterogeneity in the effects of different cross-country ties. In particular, trade with rich model countries, joint participation in the UN and UNESCO, and joining a free trade agreement all contribute to fertility convergence between countries. Whereas the prevailing focus in fertility research has been on factors producing fertility declines, this analysis highlights specific mechanisms-trade and connectedness through organizations-leading to greater similarity in fertility across countries. Globalization is a process that propels the spread of culturally laden goods and schemas impinging on fertility, which in turn produces fertility convergence.

The Increasing Irrelevance of Trade Diversion

SummaryThis paper is intended as a guide for policymakers considering new regional trade agreements. The data provided here show that only about a quarter of imports are potentially subject to trade diversion from new agreements (i.e. they come from countries outside of regional trading blocs and in industries with positive most‐favored nation tariffs). Since this percentage is steadily declining with the increasing number of regional trade agreements and the falling level of tariffs, trade diversion is becoming increasingly irrelevant as a concern for new trade deals. The paper also estimates how each potential new bilateral free trade agreement would affect a country's imports and exports, as well as whether the increased imports would replace domestic production, imports from other RTA partners, or imports from non‐RTA partners. In this way, the estimates are able to shed light on which countries make the best partners for new regional trade agreements. Finally, the paper provides estimates of the trade effects for two large potential new regional agreements: the Transatlantic Trade and Investment Partnership and the Trans‐Pacific Partnership.

Capital Market and Economic Growth in Transition Countries: Evidence from South East Europe

ABSTRACT The South American trade bloc, Mercosur, is made up of the four countries of Brazil, Argentina, Uruguay, and Paraguay, with associate members, Chile and Bolivia. Mercosur has recently experienced a number of setbacks that have called into question their stability and effectiveness as a preferential trade bloc. Brazil's dominant self-motivated leadership role and unilateral actions have weakened the unstable union. Argentina's severe recession and the devaluation of the Brazilian real have also contributed the downward spiral. The recent decision of Chile to forgo full membership in Mercosur due to the high common external tariffs for non-member countries, should serve as blatant warning that Mercosur needs to change its ways. Although the early 1990's proved to a successful period, the recent downward trends require immediate action if Mercosur is to continue to be the dominant trade area of South America. This paper discusses the need for Mercosur to define itself multilaterally, as well as its future ambitions as a full customs union. Examination of an alternative trade bloc, a free trade area, as a feasible option for increasing growth and stability in the member countries is also discussed. Three critical steps are outlined that Mercosur must take to overcome its current unrest and instability, so that it can continue as the dominant trading power in South America. LITERATURE REVIEW The four South American countries of Brazil, Argentina, Uruguay, and Paraguay formed the trade bloc Mercado Comun del Sur or Southern Common Market--commonly known as Mercosur-in March of 1991. The primary objective of Mercosur was to create an integrated regional market whose members were committed to liberalizing trade with one another while imposing a common external tariff (CET) on goods and services imported from non-members (Connelly, 1999). In 1996, Mercosur extended its boundaries to include Chile and Bolivia as associate members. This type of regional trade bloc is known as a customs union (CU). The other type of regional trade bloc is known as a free trade area (FTA). In an FTA arrangement, there is free trade among country members, but each member sets its own tariffs with the rest of the world (Bandyopadhyay & Wall, 1999). Typically, FTAs are wide in scope and set up parameters for activity in fields as diverse as the free flow of capital goods, monetary policy, treatment of intellectual property, dispute resolution, anti-dumping, and rules of competition (Stinson, 1999). The North American Free Trade Agreement (NAFTA) between Mexico, the United States, and Canada is one of the largest and most sweeping economic agreements of this type. Customs Union (CU) The two most important characteristics of a customs union are the total or partial elimination of monetary and non-monetary trade barriers within the borders of the union, and the adoption of common tariffs and trade policies on products originating outside of the union (Nakos, 2001). The membership of a nation within the customs union could influence the trade of that nation in a variety of ways. Depending on the state of the international economy, the country could increase their trade with member countries because of the lower tariffs and yet receive higher costing lower quality products. A country could also be forced to reduce trade with a non-member partner due to the high tariffs mandated by the union while creating shortages of essential products that member countries do not have available for trade. On the other hand, the customs union could be a favorable move by neighboring countries to increase trade between them without jeopardizing trade with non-members. Under either scenario, the customs union theory differentiates between two sources of increased trade: trade creation and trade diversion. Trade creation can occur when there is a restructuring of the production facilities with the member countries of the customs union such that a more efficient mode of operation is achieved (Nakos, 2001). …

Impact of SAFTA on South Asian Trade

The formation of regional trading blocs has been a subject of many debates, particularly with respect to trade creation and trade diversion in static and dynamic senses. Our study discusses this issue by examining how South Asian Regional Free Trade Area (SAFTA) affects bilateral trade flows. Results show that formation of SAFTA has been associated with an increase in bilateral trade flows within its member countries as well as between member and non-member countries. These positive intra-bloc and extra-bloc effects imply that SAFTA could develop further into a trade creating regional bloc, thereby addressing the concerns of the skeptics that SAFTA will have substantial net trade diversion effects.

Empirical Analysis Between Export and GDP : A Case of BIMSTEC as a Regional Trading Bloc

This main aim of study was to assess the empirical relationship between exports and GDP for BIMSTEC nations by using annual data for the period from 1997- 98 to 2012-13. Time-series data was used for testing econometric techniques (Granger causality and cointegration) for the assessment of hypothesis of GDP strategy led by exports and exports led by GDP. BIMSTEC was proposed with the object to merge Thailand's 'Look West' policy and ASEAN with the 'Look East' policy of India and South Asia. The results explained the evidence of uni-directional causality between GDP and exports among the BIMSTEC bloc. The results support the growth-led exports in case of BIMSTEC. For making BIMSTEC a vibrant regional entity, there is need to revitalize coastal shipping preparations and inter-modal transport, practices for easy flow of goods and services.

REGIONAL TRAE BLOCS : A CASE STUDY OF THE WELFARE IMPACT OF THE EUROPEAN UNION ON INDIA AND KENYA

Some countries, including the big player in the world economy, the USA , believe that free trade liberalization based on principles of non discriminatory and multilateral bases as well as an open market will improve the welfare of many countries. However, other countries do not follow the idea of trade liberalization and hence respond by forming regional trading blocs. Therefore, the existence of such trading blocs will be examined, whether they are a 'building blocks' or a 'stumbling blocks, for sustaining the free trade liberalization. And hence, this paper focuses on three main parts: rationalization of the establishment of trading blocs; identification of the critical factors for the success of these blocs; and presentation of empirical evidence for the welfare implications of the trade diverting effects of the European Union through the analysis of two less developed countries, India and Kenya.

Services in Regional Trade Agreements: Implications for India

Services in Regional Trade Agreements: Implications for India

What drives stock market integration? An analysis using agribusiness stocks

AbstractThis article explores the drivers of regional stock market integration with a focus on the agribusiness sector across relevant regional trade blocs around the world. We implement panel cointegration models to analyze the stock indices of agribusiness firms in the Southern Common Market (MERCOSUR), European Union (EU), Asia‐Pacific Economic Cooperation (APEC), and North American Free Trade Agreement (NAFTA). Based on the literature on market integration and stock return pricing, we identify nine possible determinants of stock market integration, which we separate into three categories: individual market performance, macroeconomic conditions, and agricultural trade. In our analysis, we account for agriculture‐specific factors to control for possible structural shifts in financial markets regimes by including the two main commodity price bubbles during last 20 years. Our results show that most of the variables included in our categories have been important factors in promoting regional stock market integration. Moreover, integration among regional stock markets was strengthened by the implementation of trade agreements. This effect is stronger in trade blocs with fewer members, such as NAFTA and MERCOSUR, compared with larger and more heterogeneous blocs, such as the EU and APEC.

The Legal Reasoning of the Andean Court of Justice in Comparative Context

The Andean Court of Justice (ACJ), the judicial arm of the Andean Community, has emerged as one of the more active of a recent wave of newly created international or regional courts with jurisdiction over a regional trading and integration bloc. The ACJ is one of several such courts in South America, and the European Court of Justice (ECJ) can be understood as a model in terms of its jurisdiction and procedure. The ACJ has dealt with many of the same issues as the ECJ, especially what can be considered ‘constitutional’ issues. This paper is part of a larger study mapping legal reasoning in international courts, examining both the practice and the articulation of legal reasoning by these courts. First this paper examines the brief period of practice of the Central American Court of Justice (CACJ), the first modern international court, as to how the CACJ approached legal reasoning. A relatively small number of ACJ judgments are then selected and discussed in some detail on the basis of a qualitative criterion: their ‘constitutional’ and precedential importance in establishing fundamental principles operative in the legal system of the Andean Community. These principles relate to: supremacy of Andean Community law over the law of its Member States, the direct effect of Andean Community law in the courts of its Member States, and the external relations of the Andean Community. It is concluded that there is a superficial similarity of approach of the ACJ to the ECJ in their approach to legal reasoning, but there are substantial differences. The differences are that the ACJ has tends to be more explicit and does not argue for the specificity of Andean system to the same extent and it appears to accept the universalisability of interpretation. On the other hand, as with the ECJ, neither does it articulate the issue of levels of generality or the substantive reasons for different methods of interpretation. Influences across different regional integration blocs are likely to become a stronger feature of international judicial practice.

Exploring the Links between Bilateral and Regional Trade Agreements and Merchandise Trade

AbstractOver 200 bilateral and regional trade agreements are currently in force, yet their impact remains a topic of debate. We analyse effects of 27 agreements that are of particular importance for Australia on the value of merchandise trade flows using data from 1970 up to the global financial crisis in 2008. We show that preferential trade agreements generally increase trade between members but that there are often offsetting negative effects on trade with non‐signatories. In contrast to regional trading blocs and bilateral accords, agreements more oriented towards open trade principles have a positive impact on all trade flows of member nations.

Regional Trade Agreements and Bilateral Trade: An Eclectic View of the Hidden Trade Costs

Trade costs associated with institutional failures and political risks, continue to serve as a big barrier to regional and international trade. Despite this strong impediment, limited work has been done to investigate the effect of weak institutions and type of political regime on bilateral trade. In an attempt to bolster this literature, this paper investigates the effects of these hidden trade costs on bilateral trade. The paper employs an augmented gravity equation derived from a monopolistic competition model of product differentiation to examine this effect for a sample of 46 countries in three distinct regional trade blocs. Using the Poisson Quasi Maximum Likelihood, the Heckman two-stage, Tobit and Negative Binomial estimation techniques, this paper concluded that stronger institutions of trading partners leads to an increase in trade. I argue that stronger institutions of both the exporting and importing countries in the form of good regulatory and legal framework reduce the uncertainty in contract enforcement, transactions costs and ultimately increase trade. Differences in political regimes of trading partners also have a strong effect on trade. Results also indicate that regional integration boosts bilateral trade, but there is evidence of trade diversion in WAMZ and MRU trading blocs.The proposition that geographically proximate partners traded more is supported according to the results, but there is little or no empirical support for the hypothesis that differences in factor endowments predict patterns of trade in the sample of countries. The sensitivity and robustness tests results indicate that the parameter estimates are robust to different estimation techniques and specification of the gravity model.

Bilateral Trade Flows in African Trading Blocs: A Network Analysis

This paper explores the patterns of bilateral trade in Africa as a whole, and trade relationships within four regional trading blocs: COMESA, ECOWAS, SADC and ECCAS. Common network statistics are used to characterise and compare the structure of these regional trade arrangements in Africa, and network positions of countries both in the overall African trade network and within trading blocs. The analysis shows that the African trade link network has a star-like structure with larger economies such as South Africa, Nigeria, Angola, Morocco, Cameroon, Algeria and Tunisia at the core, and smaller economies at the periphery. Further, the four trading blocs exhibit various levels of network cohesion. ECOWAS as the oldest trading bloc ranks highest in most network cohesion indicators, followed by COMESA and SADC. ECCAS consistently ranks lowest. Finer grained analysis however reveals a few surprises.

Market, Country and World Effects on Regional Equity Market Integration

This study explores the fundamental driving forces of regional equity market integration in a trading bloc. The determinant factors are categorized into market attribute, economic fundamentals and world information. Our sample consists of 26 equity markets of ive regional trading blocs, namely AFTA, CER, EFTA, EU and NAFTA over the period of January 1999 to August 2005. We measure market integration based on pricing errors as proposed by Korajczyk (1996) and Levine and Zervos (1998). Using panel regressions, our results show that equity integration in these trading blocs is driven internally, where only individual-market volatility and economic fundamentals play a signiicant role in the process. Intra-bloc trade is found to enhance regional equity market integration, supporting the notion that regional convergence extends beyond the trade sector that is promoted in the trade agreements. We also document regime shifting effects during stock market crises, where most of these markets became strongly integrated after a regional crisis, but integration was signiicantly weakened during a crisis that affected the world markets. Also, the level of equity market integration differs across trading blocs, where the blocs with a smaller number of country members are relatively more integrated. );} // --> activate javascript

A Pragmatic Situational and Symbiotic Market Requirements Appraisal

African textile and clothing industry though has been in a state of instability, have undergone great transformation to fit in the international trade through implementing the World Trade Organization requirements of a liberalized market and promoting bilateral trade. However, little is known about the current market situation and regulation requirements being implemented. This article provides a comprehensive appraisal to enable understand the African business environment in ways useful in developing this sector, and guiding textile and clothing companies wishing to invest and trade in Africa. It focuses on the structure and characteristics of African four most active Regional Economic Communities (REC) pillars, consisting 42 of the 48 Sub-Saharan Africa (SSA) countries. Through a situational comparative and symbiotic trade analysis of these integrated regional economic markets, this study assesses the current policies towards promoting internal and external trade. The analysis reveals that the integration of regional economic trading blocs has led to the development of more competitive and sustainable markets, and mitigating effects of trade liberalization.

The South Asian Association for Regional Cooperation: Problems and prospects

Regionalism has been an important force in international relations since 1945. Most regional organizations that came into existence after the end of the Second World War dealt primarily with defence and security issues. With the passage of time, however, regional trading blocs have considerably gained in importance. The aim of this article is to look at the only regional organization in South Asia, the South Asian Association for Regional Cooperation (SAARC). The article argues that regionalism in contemporary South Asia has been problematic right from the start because South Asia has been plagued with ongoing conflicts both at the interstate level and at the domestic level. The main interstate conflict in South Asia has been the Kashmir conflict between India and Pakistan, the two dominant forces in the region. Internal problems within India include the Maoist insurgency and secessionist movements in the Indian northeast. Pakistan has also struggled with major internal problems such as Islamist terrorism. Since these countries have been giving their time and attention to their internal problems, developing a unified approach to deal with regional problems and also a collective sense of identity has proven to be very problematic. These internal problems within the national boundaries of each of these South Asian countries and the interstate conflicts in the region especially between India and Pakistan have most certainly undermined regionalism in the past in South Asia, and continue to do so. Finally, the article takes a security studies approach whilst making an assessment of the SAARC.

Anatomy Of The Southern African Customs Union: Structure And Revenue Volatility

This paper studies the evolution of the Southern African Customs Union (SACU), tracing it from its inception in 1889 as the Customs Union Convention, the worlds first customs union, to its current status. While the union has operated under different agreements, which have been negotiated and renegotiated with changing circumstances, the study identifies the agreements of 1889, 1910, 1969 and 2002 as key to the unions transformation. It is observed that SACU has evolved from a geopolitical organisation with a repressive colonial foundation to a well-integrated regional trading bloc that is perceived as a possible springboard for larger regional trading blocs in Africa. The study further explores evidence of declining SACU revenue and investigates its implications on government expenditures in the small members of the union; namely, Botswana, Lesotho, Namibia and Swaziland (BLNS countries). It is found that among the members of the union, Lesotho and Swaziland are the most dependent on SACU transfers and, consequently, the most vulnerable to the current downward trend in SACU revenue. While Namibia has traditionally relied on diamond exports, it has also been receiving large SACU transfers relative to its GDP. In addition, the study observes that the present SACU revenue sharing formula adopted in 2002 exposes the BLNS countries to instabilities arising from global business cycles more than it does South Africa.

Challenges and Opportunities for Regional Integration in Africa: The Case of Sadc

Regional integration is useful for economic, political and social development of countries. Despite the numerous efforts by African states to form regional trading blocs, existing Regional Economic Communities (RECs) in Africa have not been successful achieving their intended objectives of poverty reduction and economic development. This paper looked into regional integration in Africa, with particular focus on the Southern African Development Community (SADC). The research was a qualitative case study. SADC is largely unable to sustain its operations in case of donor funding cessation. Intra-SADC trade is low, though large by African standards. Factors that influence intra-SADC trade were highlighted as lack of industrial capacity within SADC, high cost of doing business, slow implementation of agreements, and lack of private sector participation, geographical proximity and presence of institutional frameworks. There is need for SADC to explore regional value chains as a way of boosting intra-regional trade.

Regional Economic Integration in the Asia Pacific Region: Is an FTAPP the Catalyst for One Community?

In order to argue that the proposed FTAAP is the second-best policy option for APEC member economies and the world economy com-pared to the stalled first-best multilateral liberalization effort like the DDA (Doha Development Agenda), we examine existing arguments for and against the proposed FTAAP. From our examinations, we find that the FTAAP is a sustainable RTA (Regional Trade Agreement) and will work as a stepping stone towards global free trade. In addition, the FTAAP will be a more desirable RTA if it is cooperated with the APEC’s principle of open regionalism or/and evolves to a customs union of the region. However, unlike traditional FTAs, the FTAAP has some APEC-specific impediments to its establishment of a regional trade bloc at present. Some policy recommendations would be proposed to overcome the obstacles.

A Free Trade Area of the Asia Pacific (FTAAP): Is It Desirable?

This paper evaluates whether the proposed FTAAP is a desirable policy option for APEC member economies and the world economy. More specifically, this paper qualitatively investigates whether the FTAAP satisfies conditions for a trade bloc to generate positive and sufficient net trade creation effect. In addition, this paper estimates the likely impact of the FTAAP by using a CGE model analysis. From the qualitative analysis based on statistical data, this paper strongly argues that the FTAAP can be a desirable regional trade bloc able to generate positive gains from freer trade. From the ex-ante scenario analysis using both static and capital accumulation CGE Models, this paper concludes that the FTAAP has great potential for improving welfare of participating APEC economies and will boost economic growth in the region. In particular, the FTAAP would be even better if it can be linked with liberalization of trade in services and enhanced trade facilitation.

International business research: strategies and resources

Introduction Chapter 1: Basic Tools and Sources for International Business Research Chapter 2: International Monetary System and Financial Markets Chapter 3: Resources with World Coverage Chapter 4: Regional Economic Organizations and Trade Blocs Chapter 5: International Company Research Chapter 6: Classification Systems for Industry Chapter 7: International Industry Research Chapter 8: International Market Research Chapter 9: Global Investing Index About the Authors