Inclusion and Exclusion with Economic Integration: The Case of EU, NAFTA and ASEAN

Studies on the effects of regional economic integration on trade volumes have come out with consistent - and positive - results only in the case of the European Union and the EMU. In this study, an augmented Gravity Model approach is used to study the effects of the formation of EU, NAFTA and ASEAN on bilateral trade volumes with nations both inside and outside the ambit of regional blocs. Further, on the premise that such an aggregate approach can hide considerable variations between individual country impacts, country-specific time series analyses are conducted to track the effects of regional trading agreements on imports from outsider and insider countries. One result is that dynamic emerging market countries such as Korea, India, and Malaysia seem to fare well in European and North American markets despite bloc formation.