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The Welfare Implications of Trading Blocs among Countries with Different Endowments

In: The Regionalization of the World Economy

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  • Antonio Spilimbergo
  • Ernesto Stein

Abstract

In this paper, we present a model where trade is motivated both by preference for variety and comparative advantages. We use this framework to analyze the welfare implications of trading blocs among countries with different endowments with and without transportation costs. In this framework, we address the following issues: a) the welfare implications of the consolidation of the world into a few trading blocs; b) the different incentives that rich and poor countries have in choosing their partners in trade arrangements; c) whether the welfare consequences of continental preferential trade arrangements depend on the relative endowments.

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This chapter was published in:

  • Jeffrey A. Frankel, 1998. "The Regionalization of the World Economy," NBER Books, National Bureau of Economic Research, Inc, number fran98-1, October.
    This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 7822.

    Handle: RePEc:nbr:nberch:7822

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    References

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    1. Jon D. Haveman, 1996. "Some Welfare Effects of Sequential Customs Union Formation," Canadian Journal of Economics, Canadian Economics Association, vol. 29(4), pages 941-58, November.
    2. Ernesto Stein & Jeffrey Frankel, 1994. "The welfare implications of continental trading blocs in a model with transport costs," Pacific Basin Working Paper Series 94-03, Federal Reserve Bank of San Francisco.
    3. Bond, E.W. & Syropoulos, C., 1993. "Optimality and Stability of Regional Trading Blocs," Papers 5-93-2, Pennsylvania State - Department of Economics.
    4. Spilimbergo, Antonio, 2000. " Growth and Trade: The North Can Lose," Journal of Economic Growth, Springer, vol. 5(2), pages 131-46, June.
    5. Levy, Philip I, 1997. "A Political-Economic Analysis of Free-Trade Agreements," American Economic Review, American Economic Association, vol. 87(4), pages 506-19, September.
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    Cited by:
    1. Panagariya, A., 1997. "Preferential trading and the myth of natural trading partners," Japan and the World Economy, Elsevier, vol. 9(4), pages 471-489, December.
    2. Baier, Scott L. & Bergstrand, Jeffrey H., 2004. "Economic determinants of free trade agreements," Journal of International Economics, Elsevier, vol. 64(1), pages 29-63, October.
    3. Alexandre Skiba, 2007. "Regional Economies of Scale in Transportation and Regional Welfare," WORKING PAPERS SERIES IN THEORETICAL AND APPLIED ECONOMICS 200705, University of Kansas, Department of Economics, revised Sep 2007.
    4. Winters, L. Alan, 1996. "Regionalism versus Multilateralism," CEPR Discussion Papers 1525, C.E.P.R. Discussion Papers.
    5. Jeffrey A. Frankel & Ernesto Stein & Shang-Jin Wei, 1996. "Regional Trading Arrangement: Natural or Super-Natural?," NBER Working Papers 5431, National Bureau of Economic Research, Inc.
    6. Anna Maria Mayda & Chad Steinberg, 2006. "Do South-South Trade Agreements Increase Trade? Commodity-Level Evidence from COMESA," Working Papers gueconwpa~06-06-03, Georgetown University, Department of Economics.
    7. Richard Baldwin, 2008. "Big-Think Regionalism: A Critical Survey," NBER Working Papers 14056, National Bureau of Economic Research, Inc.
    8. Lev Freinkman & Evgeny Polyakov & Carolina Revenco, 2004. "Trade Performance and Regional Integration of the CIS Countries," World Bank Publications, The World Bank, number 14933, January.
    9. Arvind Panagariya, 2003. "The Regionalism Debate: An Overview," International Trade 0309007, EconWPA.
    10. Arvind Panagariya, 1998. "Do transport costs justifyregional preferential trading arrangements? no," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 134(2), pages 280-301, June.
    11. Souleymane COULIBALY, 2006. "Evaluating the Trade and Welfare Effects of Developing RTAs," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 06.03, Université de Lausanne, Faculté des HEC, DEEP.

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