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North-South customs unions and international capital mobility

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  • Fernandez-Arias, Eduardo
  • Spiegel, Mark M.

Abstract

This paper examines the implications of a North-South trade accord where investments in the Southern partner nation exhibit country risk. Our analysis demonstrates that North-South trade accords can serve as credibility-enhancing mechanisms that induce additional foreign capital inflows into Southern partner nations. The presence of sovereign risk changes the tradeoffs between trade creation and diversion, enhancing the potential for regional trade accords to increase the welfare of accord members.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of International Economics.

Volume (Year): 46 (1998)
Issue (Month): 2 (December)
Pages: 229-251

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Handle: RePEc:eee:inecon:v:46:y:1998:i:2:p:229-251

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Web page: http://www.elsevier.com/locate/inca/505552

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  6. de Melo, Jaime & Panagariya, Arvind & Rodrik, Dani, 1992. "The New Regionalism: A Country Perspective," CEPR Discussion Papers 715, C.E.P.R. Discussion Papers.
  7. Raquel Fernandez, 1997. "Returns to Regionalism: An Evaluation of Non-Traditional Gains from RTAs," NBER Working Papers 5970, National Bureau of Economic Research, Inc.
  8. Jeremy Bulow & Kenneth Rogoff, 1998. "Sovereign Debt: Is to Forgive to Forget," Levine's Working Paper Archive 209, David K. Levine.
  9. Gene M. Grossman & Elhanan Helpman, 1993. "The Politics of Free Trade Agreements," NBER Working Papers 4597, National Bureau of Economic Research, Inc.
  10. McLaren, John, 1997. "Size, Sunk Costs, and Judge Bowker's Objection to Free Trade," American Economic Review, American Economic Association, vol. 87(3), pages 400-420, June.
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  12. Bagwell, Kyle & Staiger, Robert W, 1997. "Multilateral Tariff Cooperation during the Formation of Free Trade Areas," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(2), pages 291-319, May.
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Cited by:
  1. Waldkirch, Andreas, 2006. "The ‘New Regionalism’: Integration as a Commitment Device for Developing Countries," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 21, pages 397-425.
  2. Piazolo, Daniel, 1997. "Gaining credibility and enhancing economic growth through regional integration: The case for EU membership of Eastern Europe," Kiel Working Papers 837, Kiel Institute for the World Economy.
  3. Popa, Ana & Oprunenco, Alex & Lücke, Matthias & Tekce, Mahmut & Eugen, Hristev & Mincu, Georgeta & Vasilescu, Victoria & Prohnitchi, Valeriu, 2009. "A free trade area between the Repbulic of Moldova and the European Union: feasibility, perspectives and potential impact," Open Access Publications from Kiel Institute for the World Economy 28899, Kiel Institute for the World Economy (IfW).
  4. Ayça Tekin-Koru & Andreas Waldkirch, 2010. "North-South Integration and the Location of Foreign Direct Investment," Review of International Economics, Wiley Blackwell, vol. 18(4), pages 696-713, 09.
  5. Tekin-Koru, Ayca & Waldkirch, Andreas, 2007. "North American Integration and the Location of Foreign Direct Investment," MPRA Paper 5212, University Library of Munich, Germany.
  6. Dieter M. Urban, 2006. "Multilateral Investment Agreement in a Political Equilibrium," CESifo Working Paper Series 1830, CESifo Group Munich.
  7. Goohoon Kwon & Raphael A. Espinoza, 2009. "Regional Financial Integration in the Caribbean," IMF Working Papers 09/139, International Monetary Fund.

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