History,regionalism, and CARICOM trade: A gravity model analysis

Abstract

A gravity model is fitted to 17 annual cross sections, 1980–1996, of bilateral trade data (imports and exports) between CARICOM member states and selected trading partners. Specifically, the paper investigates the effects of regional integration, colonial legacies and linguistic ties on CARICOM bilateral trade flows between member states and between member states and North American and European Union countries. The empirical results indicate that history and regionalism have had significant and strong effects on CARICOM trade. Additionally, two traditional explanatory variables in gravity models, income per capita and population, have significant and positive effects on CARICOM trade while the distance between trading partners exerts the expected negative effect.