The link between regional integration agreements, trade flows and economic crisis: A static and dynamic gravity model

Abstract

Purpose

This paper aims to use the approach based on the application of the law of gravity for the study of the flows of export and the effects of the RTAs.

Design/methodology/approach

In this paper, the authors evaluate the effects of RTAs on exports between members and non-members taking into account the Vinerian specification. The authors also try to estimate the impact of the recent economic crisis on the flows of export and the success of the RTAs. The authors use a model of static and dynamic gravity for 40 countries and six RTAs during the period 1980-2011.

Findings

Definitely the proliferation of RTAs will continue to be one of the driving forces that will constitute the political system and the global economy in the following years. It indicates a process that implies the merger of economies separated in bigger regions of free trade. Regional integration is seen as beneficial in many senses and is the major economic objectives in addition to presenting a stabilizing factor in international relations.

Originality/value

The gravity model is estimated using the last techniques of panel data which takes into account the endogeneity of the effects of integration and the existence of dynamic effect.

Citation

Kahouli, B. and Maktouf, S. (2014), "The link between regional integration agreements, trade flows and economic crisis: A static and dynamic gravity model", International Journal of Development Issues, Vol. 13 No. 1, pp. 35-58. https://doi.org/10.1108/IJDI-11-2013-0082