KIEP Working Paper 07-07
According to the WTO data for regional trade agreements (RTA), the number of RTA has been exponentially growing since the middle of the 1990s. As a result, many countries these days have had more than one free trade partner country. In this paper, we attempt to find out statistically important characteristics of countries that may explain the frequency of a countrys RTA formations and as a result its total number of free trade partner countries. We find that the following country-specific variables are important: distance from equator, government effectiveness, and the low-middle income group countries and regional blocs that countries belong to. In contrast, the following variables are not statistically significant: geographical size of country; upper-middle or high-income group countries; languages and other institutional variables such as political aspects and the stability, law, regulation, and national corruption level. The important implication of the findings is that the current expansion of RTAs may not be linked to a global free trade system because of the peculiarity of countries having multiple RTAs.