The effect of economic integration and institutional quality of trade agreements on trade margins: evidence for Latin America

Abstract

This paper studies the effects of economic integration, as well as the institutional quality of existing trade agreements in Latin America, on the margins of trade. The analysis is performed on bilateral exports of goods from 11 member countries of the Latin American Integration Association (LAIA) over the period 1962–2009. The authors distinguish the effects of different levels of integration on trade margins and different “timing”; and they go further by considering the effect of institutional quality of trade agreements on different sectors. Their results provide evidence of the benefits of regional integration, which is in line with LAIA members’ development and industrialization objectives.