Geography, economic size, or common history, help predicting signed regional trade agreements (RTAs). However, not all signed RTAs are “natural” according to economic determinants. En-dogeneity and general equilibrium effects of RTAS are the two mechanisms addressed in this paper. We estimate the time-varying probability for a country pair to sign a trade agreement and build upon structural gravity in general equilibrium to determine how the patterns of Global Value Chains shape the evolving geography of optimal RTAS. Our results confirm that the endogenous geography of RTAs is shaped by the development of GVCs.
preferential trade agreements global value chains structural gravity