Exploring hubness in Regional Trade Agreements

Abstract

In the plethora of Regional Trade Agreements (RTAs) some countries take in a more central position than others in the sense that some countries are much more engaged with other countries through RTAs. Furthermore, the position of some countries is that of a hub: they have (many) trade agreements with other countries (bilateral and plurilateral), but the countries they are engaged with (‘spokes’) do not have trade agreements with each other. Using the current number of RTAs in goods and services as notified to the WTO until now, we develop a measure to assess the ‘hubness’ of a country in its trade agreements with the rest of the world. The paper then explores the extent to which being a hub is a prerogative of advanced countries, as is often (implicitly) assumed in the literature on RTAs. This is important because of the literature’s focus on the asymmetric welfare consequences for the hub (positive) and spokes (negative) of being part of a hub-and-spoke relationship.