Country size and the choice of partner countries in forming preferential trading agreements 

Masahiro Endoh, Keio University 

Abstract

This paper investigates the choice of partner countries in forming Preferential Trading Agreements (PTAs), analyzes two "syndromes" of regionalism, and shows the results of multi-country computer simulation. The following main conclusions are obtained. First, countries that are geographically close are likely to form PTAs. Secondly, the greater the economic size of the home country, the stronger its "syndromes" are and the smaller the geographical size of the PTA is. Thirdly, large countries prefer forming PTAs, while small countries prefer worldwide free trade, that means PTAs have a malign impact on multilateral trade negotiations.

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