Regional Integration Agreements and the Geography of World Trade: Measurement Problems and Empirical Evidence

The growth in intra-regional trade has been one of the dominant features of the world economy in the last years. The statistical indicators which are commonly used in order to measure this phenomenon (the intra-regional trade share and the Balassa intensity index) are inadequate to evaluate its dynamics, as well as to compare different regions. This paper reviews the analytical limitations of the available statistical tools, and proposes some new indicators, experimenting their application to the data concerning the four main re- gional integration areas (ASEAN, EU, MERCOSUR and NAFTA) in the period 1990-2000. In particular, a “trade introversion index” is proposed, which seems able to surmount all the main shortcomings of the traditional indicators. Comparative assessments of intra-regional trade are strongly affected by the choice of the statistical indicator. All the four regions considered in this paper experienced a moderate upward trend in trade introversion in the nineties. The level of the index for MERCOSUR was much higher than for the other regions.