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  • Writer's pictureDevasmita Jena

The Development of Trade Blocs in an Era of Globalization

Have you ever wondered about the evolution pattern of trade blocs since the 1950s? If you thought that trade blocs formed around core markets of North America, European Union and Japan, you are in for a surprise. Trade Economists - Tristan Kohl and Aleid E. Brouwer - of University of Groningen show that international trade flows drive the formation and the geographic orientation of trade blocs. They argue that the geographical orientation of trade flows change depending on evolving spatial costs of transaction and global trade policy. Their analysis of the dynamic nature of trade during 1950-2005 yields three insights. First, trade blocs are more regional than interregional, underscoring the importance of geography in determination of trade blocs. Second, emerging economies such as Brazil, Russia, India, and China have been central to the formation of trade blocs. Third, the emergence of trade blocs are also dependent on economic, political, historical and cultural factors.

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