Regionalism, subnational variation and gravity: A four-country tale

This paper argues that the use of subnational data allows an accurate assessment of the effect of trade agreements on bilateral exports within a gravity model framework. We examine the effect of regional integration on trade flows from regions in Argentina, Brazil, Poland and Spain to a sample of importing countries. Specifically, we focus on two events that occurred in the EU and in Latin America over a decade ago: the EU enlargement to the Central and Eastern European countries, and the signing of a Free Trade Agreement between two Latin American regional blocs, the Southern Common Market and the Andean Community.The author gratefully acknowledges the support and collaboration of Universitat Jaume I and Generalitat Valenciana (P1-1B2013-06; PROMETEOII/2014/053). Thanks to Àlvar Franch Doñate for his contribution to database processing. I would also like to thank Benedikt Heid, María Luisa Recalde and Stanislaw Uminski for their very helpful comments and suggestions