Economic Integration and Endogenous Trade Agreements: Analysing Global Trade Effects.

This article examines the proliferation of regional trade agreements (RTAs) since the 1990s, focusing on their endogenous formation driven by both economic and non-economic factors, including political motivations. Using an econometric analysis based on the gravity model and the Heckman control function approach, the study addresses the endogeneity bias in estimating RTAs' impact on bilateral trade flows among 67 countries from 2013 to 2019. The findings indicate that when accounting for endogeneity, RTAs have a positive and statistically significant effect on trade, increasing trade flows by approximately 6%, contrasting with insignificant effects found under exogenous assumptions. The article also discusses challenges in RTA implementation, such as overlapping agreements ("spaghetti bowl" effect), complex rules of origin, and deeper integration provisions, which complicate empirical assessment and may affect welfare outcomes differently across countries.