Does Regionalism Hinder Multilateralism: a Case Study of India

Abstract

Today many developing countries fear that regional movements in other parts of the world will adversely impact their trade as regionalism overtakes multilateralism. The response has been that most of them are trying to get into one regional bloc or the other via regional trade arrangements (RTAs). In this paper we have investigated how India as a non-member country is affected by formation of RTAs like ASEAN, EU, NAFTA, and MERCOSUR. Controlling for non-RTA factors that influence exports, we find that India's exports to these RTAs seem to be affected not by the formation of these RTAs per se but by demand side factors.