Abstract
Rush for the trade liberalization has been a prominent feature of the international trade since the late 1980s. Particularly developing and a newly industrialized countries followed this trade policy as a tool for an economic development.
However, the question of "why so many trade agreements?" and "why in such a short period of time" is not a novel one and has been occupying academic debate for significant period of time, hence, the aim of the paper is to complement existing research by evaluating only a fraction of the theoretical explanations toward the economic regionalism and offer supporting evidence by analysing empirical data in the particular case of the East Asian economies. The general idea of the proposed paper is to evaluate two groups of IPE explanations to the trade cooperation, by comparing two groups of arguments, one supporting material determinants and the other advocating for impact of the international politics and role of the GATT/WTO.
To support evaluation of the theoretical approaches, the paper will offer an analysis of the empirical data, showing the relationship between the investments and trade flows, used a dependent variables, and the number of the signed trade and investment agreements, used as an independent variables, and a membership in the WTO will be used as a dummy variable. Simple multivariate regression shows that regional trade agreements and bilateral investment agreements, are statistically significant, however, they do explain only tiny fraction of the variations in the FDIs and trade flows.
Therefore other factors than economic benefits must manage countries' willingness to join the trade cooperation.