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Does Institutional Integration Lead to Economic Integration? A Lesson from India-China Regional Trade Agreements

Vol 7 , Issue 1 , January - June 2020 | Pages: 102-116 | Research Paper  

 
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https://doi.org/10.17492/focus.v7i1.195424


Author Details ( * ) denotes Corresponding author

1. * Mayengbam Lalit Singh, Assistant Professor, Department of Economics, Khamanipur College, Manipur University, Kakching, Manipur, India (may.lalit@gmail.com)

Regionalism has become one of the most debated institutional integration. Under the umbrella of GATT article XXIV, many countries across the globe are rushing themselves into the formation of regional economic integration. It is expected that such integration yields greater trade openness and deepening between the countries in agreement. The present paper deals with successive India-China regional trade agreements; formation of BRICS bank and Asian Infrastructure Investment Bank (AIIB) and their impact on bilateral trade openness and deepening. This paper employs sophisticated econometric tools such as Unit root test and Granger causality test in order to check whether institutional integration causes trade integration for these two countries. In order to set up institutional scores, manual generation of institutional scores have been worked out from the gravity of bilateral agreements on trade and other related institutions.

Keywords

GATT; World Trade Organisation; BRICS; MFN; RTA; Hausman Taylor estimation; Unit root test; Granger causality

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