Trade Integration in the European Union
Relative Contributions of Openness and Interconnectedness
This working paper presents a set of indicators to measure regional trade integration, with a special focus on the case of the European Union. We propose measures of openness, connectedness and integration which are tuned to evaluate not only how these components contribute to the advance of international integration but also to control for the potential threat that the proliferation of regional trade agreements may pose to trade globalization.
Although this and related questions have been examined from several perspectives, the present article combines the virtues of using a network analysis approach and the possibility to explicitly quantify how regional trade agreements either intensify or thwart international trade integration. Results show that the process of international trade integration has intensified among EU members, whereas trade integration with non-members is advancing slowly. Our indicators provide a more complete view of the differing speeds of integration, which depends on the component of integration considered —either openness or connectedness.