The Development of Trade Blocs in an Era of Globalisation

Abstract

This study investigates the economic geography of international trade during the period 1950–2005. We introduce a new trade bloc variable that relies on the intramax hierarchical clustering technique to identify endogenous trade blocs with annual trade flows. Multivariate analysis with gravity-equation-based variables is used to explain how mechanisms of globalisation have affected trade patterns over the past half century. In particular, proximity and economic integration agreements are key to explaining the persistence of region-based trade blocs in a globalising world economy.