Date of this Version
Cornhusker Economics (February 22, 2023)
Agricultural Economics, University of Nebraska-Lincoln
A year ago, Cornhusker Economics reported on the substantial trade integration that has been taking place globally in recent decades (see Beghin, 2022). With this proliferation of Economic Integration Agreements (EIAs) through regional and bilateral trade agreements and customs unions since the 1990s, many economists have investigated the effect of these agreements on merchandise trade. Early investigations struggled to find robust findings. They reached two opposite conclusions, with an eventual rejoinder on their limitations. Some investigations found statistically insignificant or negligible effects of EIAs on trade flows. Other investigations found significant effects, sometimes negative, of EIAs on trade. See Park and Beghin (2023) referenced at the end of the article for detailed references of these studies.
These opposite findings and variability of the estimated effects of EIAs on trade flow led to addressing the suspected endogeneity of EIAs and trade flows.