chapter  5
40 Pages

Regionalism and multilateralism

ByJoseph P. Daniels, David D. VanHoose

Some observers have expressed concerns that membership in regional trade blocs might expose nations to greater variations in economic growth over time. The reason, they theorize, is that participating in these blocs could induce countries to develop comparative advantages in ever more specialized products. Kangni Kpodar and Patrick Imam of the International Monetary Fund utilize data from 170 countries to evaluate whether membership in regional trade blocs raises or reduces the volatility of economic growth. The most commonly used measure of international trade is the total flow of trade across national borders, which is simply the sum of export and import flows within a given interval. The World Trade Organization (WTO) has had to perform a careful balancing act to promote multilateralism and lower trade restrictions as regional trade agreements have proliferated. One development that offers some support for Frankel's interpretation is that a number of regional trade agreements are beginning to overlap.