Working Paper: CEPR ID: DP6874
Authors: Richard Baldwin
Abstract: Economic thinking on regionalism has traditionally focused on the Vinerian question: Would a nation gain from joining a trade bloc? Since 1991, "Big Think Regionalism" considers the broader question of regionalism?s impact on the world trading system focusing on two questions: Does spreading regionalism harm world welfare? and Does regionalism help or hinder multilateralism? This paper syntheses and critiques the theoretical literature in an attempt to identify the insights that are useful for thinking about regionalism?s systemic impact in the new century.
Keywords: multilateralism; regionalism; stumbling and building blocks; world trade system
JEL Codes: F02; F13; F15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Increase in the number of regional trade agreements (RTAs) (F13) | Harm to world welfare (I30) |
| Formation of RTAs (F15) | Trade diversion from non-member countries (F14) |
| Trade diversion from non-member countries (F14) | Welfare losses for those countries (D69) |
| Establishment of RTAs (F15) | Reduced incentives to engage in multilateral tariff negotiations (F13) |
| Regionalism (R11) | Hinder multilateralism (F52) |