This paper demonstrates how regional trade agreements (RTAs) can lead to both foreign direct investment expansion and relocation effects. These two effects, in return, impact the endogenous formation of RTAs. The investment expansion effect results from foreign firms’ ability to serve a larger...

The United States imports around 25% of its merchandise under some form of preferential trade agreement. This paper examines the relative impacts of these programs on the value of imports from different trading partners. We address four technical but policy-relevant issues: (1) We consider not...