Plugged into the Network? How PTA Ties Divide Developing Countries.

Without doubt, the WTO negotiations are in trouble. But can the rapid proliferation of preferential trade agreements (PTAs) supplant multilateral liberalization, as many policymakers suggest? This paper focuses on the implications of PTAs for developing countries, analyzing how their position in networks of trade agreements affects their trade profiles. Using a variety of centrality measures developed in social network analysis, the study employs a gravity model framework to estimate the trade effects of multiple PTA ties. The data is drawn from a new database of exports disaggregated by production stages.The findings suggest that for some developing countries, signing enough PTAs to assume a central position in the global network of trade agreements has greater benefits than the additive effect of individual deals. Centrally located countries tend to trade more in goods that are higher in the value chain. For these countries, signing many PTAs could be an effective development strategy.But other developing countries that are less successful at signing preferential agreements, in particular in Africa and the Middle East, are even more disadvantaged as a result. Their isolated position in the network of trade institutions hinders their progress beyond the export of primary goods. While multilateralism in principle allowed equal participation in the global trade regime, the proliferation of PTAs divides developing countries into an upwardly-mobile group and a disadvantaged group that is left behind. ..PAT.-Unpublished Manuscript [ABSTRACT FROM AUTHOR]