GVCs and the Endogenous Geography of RTAs

Lionel Fontagné (1, 2) , Gianluca Santoni (3)

1 CES - Centre d'économie de la Sorbonne
2 PSE - Paris School of Economics
3 CEPII - Centre d'études prospectives et d'informations internationales

Geography, economic size, or common history, help predicting signed regional trade agreements (RTAs). However, not all signed RTAs are “natural” according to economic determinants. Endogeneity and general equilibrium effects of RTAS are the two mechanisms addressed in this paper. We estimate the time-varying probability for a country pair to sign a trade agreement and build upon structural gravity in general equilibrium to determine how the patterns of Global Value Chains shape the evolving geography of optimal RTAS. Our results confirm that the endogenous geography of RTAs is shaped by the development of GVCs.

Mots clés: structural gravity; preferential trade agreements; global value chains

Domaines: Economies et finances

Lionel Fontagné, Gianluca Santoni. GVCs and the Endogenous Geography of RTAs. 2018. ⟨hal-01773479⟩