Regional Trade Agreement and Government Procurement

ABSTRACT This study examines the impact of government procurement provisions in regional trade agreements (RTAs) on cross‐border procurement flows. We construct a novel dataset from 1995 to 2018, which is used to construct depth indicators that capture the characteristics of RTA government procurement provisions. We isolate cross‐border procurement flows from the OECD input–output tables. PPML estimations reveal that RTA government procurement provisions positively promote cross‐border procurement flows. This positive effect is pronounced and strengthened by institutional distance but weakened when investment decisions and geographical factors are considered. In particular, a complementary and mutual relationship exists between the government procurement agreement and RTA government procurement provisions.