Using bilateral trade flow data from 1979 to 1999, we estimate trade integration between Chile and its principal trading partners (European Union, United States and Latin America) during this period. Our estimates are based on a gravity specification, theoretically grounded on a monopolistic...

Increasingly, developing countries embrace foreign direct investment (FDI) and simultaneously pursue economic integration with developed countries. Foreign investment is subject to sovereign risk and free trade agreements may serve as a commitment mechanism in order to achieve higher sustainable...