Regionalism and Gravity

Abstract

Gravity models have been extensively used to evaluate the trade effects of regional trading arrangements, (RTAs), especially over the last 10 years or so. Questions addressed by researchers include, is there a regional bias to trade and are there identifiable trade affects attributable to RTAs? This paper reviews the evidence extant from this literature and evaluates the modelling and methodological issues confronted when applying gravity modelling to the analysis of regionalism. The paper argues that the approach has a distinctive role to play in evaluating trade effects and its application has been enhanced by both the refinement of theoretical underpinnings and development of econometric technique.

Keywords: regionalism, gravity models

JEL Classification: F14, F15