Exploring the trade facilitation role of Regional Trade Agreements (RTAs): A comparison of BRICS and the Next Eleven economies

Abstract

The present study assesses the trade facilitating role of regional trade agreements (RTAs) of BRICS and the Next Eleven (N-11) economies using annual bilateral trade over the period 2000–2019. For empirical estimation, we applied structural gravity with Poisson pseudo maximum likelihood estimator. The findings show higher effect of the RTAs for imports compared to exports for both BRICS and the N-11 countries. While the RTAs of BRICS countries mostly facilitate exports of metals, chemical products, plastic and rubber; the RTAs’ role is more pronounced for the exports of animal products, cereals, fruits, vegetable, in addition to labor intensive industries such as textile, footwear, and leather in the N-11 economies. Furthermore, the findings show that the adjustment in the exporting process in response the entry of an FTA is affected by the governance quality prevailing in the source country. In this context, Bangladesh, Egypt, Iran, Nigeria, and Pakistan particularly need to improve governance quality to spur their export performance.

Keywords

• Trade
• RTAs
• Governance
• Structural Gravity
• BRICS
• Next Eleven