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Global Production and Trade: Factor Migration and Commercial Policy with International Scale Economies

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  • Francois, Joseph F

Abstract

Spillover effects associated with international scale economies are an immediate result of global and regional integration of industries and have important implications for commercial policy. In this paper, a general, dual model of trade under international scale economies is developed and applied to examine foreign investment, labor migration, and commercial policy. Notwithstanding the intuition of policymakers, protection is not a second-best alternative to direct assistance. It reduces the efficiency of the protected sectors by hindering integration and can only improve national welfare through terms-of-trade related effects, somewhat along the line of classic optimal tariff arguments. Copyright 1994 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

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Bibliographic Info

Article provided by Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association in its journal International Economic Review.

Volume (Year): 35 (1994)
Issue (Month): 3 (August)
Pages: 565-81

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Handle: RePEc:ier:iecrev:v:35:y:1994:i:3:p:565-81

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Cited by:
  1. Holtz-Eakin, Douglas & Lovely, Mary E., 1996. "Technological linkages, market structure, and production policies," Journal of Public Economics, Elsevier, vol. 61(1), pages 73-86, July.
  2. Joseph F. Francois & Douglas Nelson, 2002. "A Geometry Of Specialisation," Economic Journal, Royal Economic Society, vol. 112(481), pages 649-678, July.
  3. Joseph Francois & Kevin Grier & Douglas Nelson, 2004. "Globalization, Roundaboutness, and Relative Wages," Tinbergen Institute Discussion Papers 04-021/2, Tinbergen Institute.
  4. Schiff, Maurice, 1999. "Trade, migration, and welfare : the impact of social capital," Policy Research Working Paper Series 2044, The World Bank.
  5. Nobuhito Suga, 2005. "International Economies of Scale and the Gains from Trade," Journal of Economics, Springer, vol. 85(1), pages 73-97, 07.
  6. Anwar, Sajid, 2005. "Variable labour supply, specialisation-based external economies, and capital inflow," International Review of Economics & Finance, Elsevier, vol. 14(4), pages 427-437.
  7. Joseph F. Francois & Hans H. Glismann & Dean Spinanger, 2000. "The Cost of EU Trade Protection in Textiles and Clothing," Kiel Working Papers 997, Kiel Institute for the World Economy.
  8. Sajid Anwar, 2001. "Commercial policy and international factor mobility in the presence of monopolistic competition," Journal of Economics, Springer, vol. 74(3), pages 259-281, October.

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