A Literature Review on Regional Trade Agreements and Development Outcomes

Abstract

This study investigates the developmental implications of Regional Trade Agreements (RTAs) through a systematic literature review of empirical and theoretical research published over the last five years. As multilateral trade negotiations under the World Trade Organization (WTO) face increasing gridlock, RTAs have emerged as key instruments for economic cooperation, particularly among developing and emerging economies. Modern RTAs have evolved to include provisions beyond traditional trade liberalization, such as environmental standards, labor rights, digital trade, and investment protections. The findings suggest that while RTAs can promote trade creation, export diversification, institutional reform, and foreign direct investment, their positive impacts are unevenly distributed. Countries with stronger institutional frameworks and policy coherence tend to benefit more, whereas those with weak governance or limited industrial capacity may experience adverse effects such as trade diversion or increased inequality. Ultimately, the effectiveness of RTAs in fostering inclusive and sustainable development depends on their design quality, enforcement mechanisms, and the extent to which domestic policies are aligned with international commitments.