<abstract xmlns="http://www.w3.org/1999/xhtml">

<p>The study aims to empirically determine whether a higher level of trade openness and the presence of better legal protection for investors enhances the impact of trade bloc membership on capital mobility based on four trading blocs: Eurasian Economic Union (EAEU), Central American and Dominican Republic Free Trade Agreement (CAFTADR), Central European Free Trade Agreement (CEFTA), and the Pacific Alliance. This study employs the fully modified and dynamic ordinary least squares estimators and a panel quantile regression cointegration estimator. The study finds that a country’s affiliation with a trade bloc improves capital mobility in the whole group and EAEU region, low capital mobility in the Pacific Alliance region and moderate low capital mobility in the CAFTA-DR region. The legal protection system alone provided for the investors does not improve the level of capital mobility unless its interaction with investment is included. Also the study reveals that high trade openness does not necessarily lead to better capital mobility for the studied trade blocs.</p>
</abstract>

The study aims to empirically determine whether a higher level of trade openness and the presence of better legal protection for investors enhances the impact of trade bloc membership on capital mobility based on four trading blocs: Eurasian Economic Union (EAEU), Central American and Dominican Republic Free Trade Agreement (CAFTADR), Central European Free Trade Agreement (CEFTA), and the Pacific Alliance. This study employs the fully modified and dynamic ordinary least squares estimators and a panel quantile regression cointegration estimator. The study finds that a country’s affiliation with a trade bloc improves capital mobility in the whole group and EAEU region, low capital mobility in the Pacific Alliance region and moderate low capital mobility in the CAFTA-DR region. The legal protection system alone provided for the investors does not improve the level of capital mobility unless its interaction with investment is included. Also the study reveals that high trade openness does not necessarily lead to better capital mobility for the studied trade blocs.

Does regional trade integration reinforce or weaken capital mobility? New evidence from four free trade areas

Economics and Business Review

This work is licensed under the Creative Commons Attribution 4.0 International License.

The study aims to empirically determine whether a higher level of trade openness and the presence of better legal protection for investors enhances the impact...

Does regional trade integration reinforce or weaken capital mobility? New evidence from four free trade areas

Published Online: Oct 13, 2023

Page range: 239 - 264

Received: Jun 16, 2022

Accepted: Jul 15, 2023

DOI: https://doi.org/10.18559/ebr.2023.3.795

Keywords
regional integration, capital mobility, trading blocs, panel cointegration estimators

© 2023 Mehmed Ganic et al., published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.

Does regional trade integration reinforce or weaken capital mobility? New evidence from four free trade areas

Published Online: Oct 13, 2023

Page range: 239 - 264

Received: Jun 16, 2022

Accepted: Jul 15, 2023

DOI: https://doi.org/10.18559/ebr.2023.3.795

Keywordsregional integration, capital mobility, trading blocs, panel cointegration estimators

© 2023 Mehmed Ganic et al., published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.

Keywords
regional integration, capital mobility, trading blocs, panel cointegration estimators