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Globalization's bystanders: Does trade liberalization hurt countries that do not participate?

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  • Stern, Robert M.
  • Deardorff, Alan V.

Abstract

This paper uses trade theory to examine the effects of trade liberalization on countries that do not participate in it. These include both countries that fail to participate in multilateral trade negotiations, and also countries that lie outside of preferential trading arrangements such as free trade areas. The analysis suggests that, while it is theoretically possible for excluded countries to gain, through improved terms of trade, from trade liberalization, several reasons suggest that they are more likely to lose.

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File URL: http://www.sciencedirect.com/science/article/B6VC6-4KFV3M6-5/2/5b515182515e51ac082835d618a5e11a
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Bibliographic Info

Article provided by Elsevier in its journal World Development.

Volume (Year): 34 (2006)
Issue (Month): 8 (August)
Pages: 1419-1429

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Handle: RePEc:eee:wdevel:v:34:y:2006:i:8:p:1419-1429

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Web page: http://www.elsevier.com/locate/worlddev

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References

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  1. Richard Baldwin, 1989. "Measureable Dynamic Gains from Trade," NBER Working Papers 3147, National Bureau of Economic Research, Inc.
  2. Kemp, Murray C. & Wan, Henry Jr., 1976. "An elementary proposition concerning the formation of customs unions," Journal of International Economics, Elsevier, vol. 6(1), pages 95-97, February.
  3. Grossman, G.M. & Helpman, E., 1992. "Protection for Sale," Papers 21-92, Tel Aviv.
  4. Drusilla K. Brown & Kozo Kiyota & Robert M. Stern, 2005. "Computational Analysis of the Free Trade Area of the Americas (FTAA)," Working Papers 528, Research Seminar in International Economics, University of Michigan.
  5. Ronald Findlay & Stanislaw Wellisz, 1982. "Endogenous Tariffs, the Political Economy of Trade Restrictions, and Welfare," NBER Chapters, in: Import Competition and Response, pages 223-244 National Bureau of Economic Research, Inc.
  6. Mayer, Wolfgang, 1984. "Endogenous Tariff Formation," American Economic Review, American Economic Association, vol. 74(5), pages 970-85, December.
  7. Panagariya, Arvind & Krishna, Pravin, 2002. "On necessarily welfare-enhancing free trade areas," Journal of International Economics, Elsevier, vol. 57(2), pages 353-367, August.
  8. Richardson, Martin, 1995. "Tariff revenue competition in a free trade area," European Economic Review, Elsevier, vol. 39(7), pages 1429-1437, August.
  9. Chang, Won & Winters, L. Alan, 1999. "How Regional Blocs Affect Excluded Countries: The Price Effects of MERCOSUR," CEPR Discussion Papers 2179, C.E.P.R. Discussion Papers.
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Cited by:
  1. Valeria Costantini & Paolo Liberati, 2011. "Technology transfer, institutions and development," Departmental Working Papers of Economics - University 'Roma Tre' 0135, Department of Economics - University Roma Tre.

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