NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Returns to Regionalism: An Evaluation of Non-Traditional Gains from RTAs

Raquel Fernandez

NBER Working Paper No. 5970
Issued in March 1997
NBER Program(s):   ITI

The last decade has witnessed an explosion in the number of regional trade agreements (RTAs). There seems to be a general if ill-defined belief on the part of many policy-makers, and among a number of academics as well, that there is more to a RTA than the traditional gains from trade. This paper examines several possible benefits that RTAs may confer to their partners, including credibility, signaling, bargaining power, insurance, and coordination. It assesses the necessary conditions for each of these candidates to work; gives stylized examples of specific types of policy where it might be applicable; examines real cases where the explanation might be relevant; and discusses their overall plausibility. It concludes by examining NAFTA and the Europe Agreements viewed in this light.

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Document Object Identifier (DOI): 10.3386/w5970

Published: (With J. Portes) World Bank Economic Review, Vol. 12, no. 2 (1998): 197-220.

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