This paper uses the tools of network analysis and graph theory to graphically and analytically represent the characteristics of world trade. The structure of the World Trade Network is compared over time, detecting and interpreting patterns of trade ties among coun-tries. In particular, we assess whether the entrance of a number of new important players into the world trading system in recent years has changed the main characteristics of the existing structure of world trade, or whether the existing network was simply extended to a new group of countries. We also analyze whether the observed changes in international trade flow patterns are related to the multilateral or the regional liberalization policies. The results show that trade integra-tion at the world level has been increasing but it is still far from being complete, with the exception of some areas, that there is a strong heterogeneity in the countries ’ choice of partners, and that the WTO

We study the relationship between participation in free trade agreements (FTAs) and the sustainability of democracy. Our model shows that FTAs can critically reduce the incentive of authoritarian groups to seek power by destroying protectionist rents, thus making democracies last longer. This gives governments in unstable democracies an extra motive to form FTAs. Hence, greater democratic instability induces governments to boost their FTA commitments. In a dataset with 116 countries over 1960-2007, we find robust support for these predictions. They help to rationalize the rapid simultaneous growth of regionalism and of worldwide democratization since the late 1980s. Key words: Regionalism; rent destruction; political regimes; trade liberalization

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An electronic version of the paper may be downloaded • from the SSRN website: www.SSRN.com • from the RePEc website: www.RePEc.org • from the CESifo website: Twww.CESifo-group.org/wp T CESifo Working Paper No. 3514

Over the last twenty years, the number of bilateral and regional preferential trade agreements in existence has increased very rapidly. Explanations of this development emphasize factors such as the spread of democracy, deadlock in multilateral trade negotiations, and learning. Our argument is that policy diffusion as a result of competition over market access is a major driving force behind what has become known as the “new regionalism”. The causal reasoning is that facing trade diversion, exporters excluded from a preferential trade agreement are likely to mobilize and push their government into signing an agreement with the country in which their exports are threatened. We test our argument against alternative explanations in a quantitative analysis of the proliferation of preferential trade agreements among 168 countries between 1990 and 2007. By showing that competition is indeed a major cause of the new regionalism, the paper contributes to the literatures on regionalism and policy diffusion.

This paper analyzes the spatial interdependence of Free Trade Agreements (FTAs) in a cross-section framework using the Contagion Index proposed by Baldwin and Jaimovich (2010). A Bayesian heteroskedastic probit model is estimated, where a spatial lag is built based on the Contagion Index, finding evidence of interdependence related with a domino-like effect. I compare the results with simple probit estimations and other spatial specifications.

One of the most notable international economic events over the past 20 years has been the proliferation of bilateral free trade agreements (FTAs). Bilateral agreements account for 80 percent of all agreements notified to the WTO, 94 percent of those signed or under negotiation, and currently 100 percent of those at the proposal stage. Some have argued that the growth of bilateralism is attributable to governments having pursued a policy of “competitive liberalization ” – implementing bilateral FTAs to offset potential trade diversion caused by FTAs of “third-country-pairs ” – but the growth of bilateralism can also be attributed potentially to “tariff complementarity ” – the incentive for FTA members to reduce their external tariffs on nonmembers. Guided by new comparative statics from the numerical general equilibrium monopolistic competition model of FTA economic determinants in Baier and Bergstrand (2004), we augment their parsimonious logit (and probit) model of the economic determinants of bilateral FTAs to incorporate theory-motivated indexes to examine the influence of existing memberships on subsequent FTA formations. The model can predict correctly 90 percent of the bilateral FTAs within

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forthcoming in Journal of International Economics The recent proliferation of free trade agreements (FTAs) has resulted in an in-creasingly complex network of preferential trading relationships. The economics literature has generally examined the formation of FTAs as a function of the par-ticipating countrieseconomic characteristics alone. In this paper, we show both theoretically and empirically that the decision to enter into an FTA is also cru-cially dependent on the participating countries existing FTA relationships with third countries. Accounting for the interdependence of FTAs helps to explain a signi cant fraction of FTA formations that would not otherwise be predicted by countrieseconomic characteristics. Key words: free trade agreements, third-country e¤ect, loss sharing, concession erosion