International Transactions and Regionalism: Distinguishing Insiders from Outsiders.

by Charles Wolf, Jr., D. Weinschrott

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An econometric analysis of criteria for choosing multination trade groupings, in those cases where such groupings are believed to be advantageous. Customarily, these groupings are based on regional criteria that stress geographic proximity as a means of saving on transportation costs. However, analysis of U.N. and International Monetary Fund data for 152 trading units and for seven geographical areas for 1958, 1963, and 1964 indicates that countries' economic size, culture, economic and technological structure all have relatively greater effects than distance on trade. Opportunities for increasing transactions through preferential arrangements lie principally outside a country's neighbors. All else equal, a country may expect larger transactions and greater gain by associating itself with countries that have larger GNPs, are closer rather than farther, have relatively developed trading sectors, have some language in common, and have a technology and income level different from its own. In this light, "regionalism" seems anachronistic indeed. 19 pp. Bibliog.

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