The broader-deeper trade off and regional trade agreements

This dissertation examines the empirical underpinnings of the broader-deeper trade off. Policy makers often worry that the enlargement of regional trade agreements comes at the expense of further deepening (integration). Enlargement will lead to more preference heterogeneity and more economic divergence among members of the RTA, which will in turn stifle decision making. Yet, our empirical understanding of whether there is such a trade off is very limited. In this dissertation, I conduct a systematic analysis of whether the trade off exists and other related questions using a dataset on regional trade agreements from the post-1950 era. The main finding of the dissertation is that enlargement does not lead to a decline in the probability of deepening in RTAs when one takes into account the different issue areas of cooperation within RTAs. Therefore, the dissertation shows that policy makers' claims about the negative effects of enlargement are overly pessimistic. On the other hand, there is some evidence that such negative effects are contextual. They arise in individual issue areas such as in trade cooperation. In other words, enlargement does lead a slow down in deepening in this area.