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Strategies for trade liberalization in the Americas

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  • Chichilnisky, Graciela

Abstract

Regional free trade zones have been unexpectedly successful in the last decade. Since 1980 the European Community enlarged significantly its membership and its scope. It now includes southern European countries, and market-integrating features allowing goods, people, services and capital to flow freely around an area accounting for about one fourth of world economic output. Based on economies of scale - we find a condition that determine whether trading blocks Such as NAFTA and the EU are complementary with and encourage global free trade - when this condition fails, instead, trading blocks undermine free trade. It is the purpose of this paper to re-examine the positive and negative aspects of trading blocs as they relate to gains from free trade. The paper is primarily a discussion of conceptual issues, although it is based on facts and on particular cases which are of interest to the trade liberalization in the Americas. We take a somewhat different approach to a familiar issue. Rather than asking the standard question of whether regional blocs help or hinder global free trade, we ask a more detailed question: what type of customs union is likely to lead to a trade war between the blocs, and what type of customs union is, instead, likely to lead to expanded global trade. In practical terms: what type of trade policies within the blocs will provide economic incentives for expanding free trade. We shall compare the impact on the world economy of free trade blocs which are organized around two alternative principles: one is traditional comparative advantages, the other is economies of scale. The aim is to determine how the patterns of trade inside the blocs determine the trade relations among the blocs.

Suggested Citation

  • Chichilnisky, Graciela, 1995. "Strategies for trade liberalization in the Americas," MPRA Paper 8393, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:8393
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    References listed on IDEAS

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    1. Raymond RIEZMAN, 2013. "Customs Unions and the Core," World Scientific Book Chapters, in: Raymond Riezman (ed.), International Trade Agreements and Political Economy, chapter 3, pages 33-43, World Scientific Publishing Co. Pte. Ltd..
    2. Chichilnisky, Graciela, 1993. "North-South trade and the dynamics of renewable resources," Structural Change and Economic Dynamics, Elsevier, vol. 4(2), pages 219-248, December.
    3. John Kennan & Raymond Riezman, 2013. "Do Big Countries Win Tariff Wars?," World Scientific Book Chapters, in: Raymond Riezman (ed.), International Trade Agreements and Political Economy, chapter 4, pages 45-51, World Scientific Publishing Co. Pte. Ltd..
    4. Chichilnisky,Graciela & Heal,Geoffrey M., 2005. "The Evolving International Economy," Cambridge Books, Cambridge University Press, number 9780521310017, January.
    5. Chichilnisky, Graciela, 1986. "A general equilibrium theory of North-South trade," MPRA Paper 8810, University Library of Munich, Germany.
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    Citations

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    Cited by:

    1. Hinojosa-Ojeda, Raul A. & Robinson, Sherman & Lewis, Jeffrey D., 1995. "Regional integration options for Central America and the Caribbean after NAFTA," The North American Journal of Economics and Finance, Elsevier, vol. 6(2), pages 121-148.
    2. Chichilnisky, Graciela, 1996. "Trade regimes and Gatt: resource intensive vs. knowledge intensive growth, Chapter 10," MPRA Paper 8813, University Library of Munich, Germany.
    3. Chichilnisky, Graciela, 1995. "The economic value of the Earth's resources," MPRA Paper 8491, University Library of Munich, Germany.
    4. Chichilnisky, Graciela & Gallopin, G., 2000. "The environmental impact of globalization on Latin America: a prospective approach," MPRA Paper 8440, University Library of Munich, Germany.

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    More about this item

    Keywords

    trading blocs; free trade; trade wars; international trade; international policy; comparative advantage; economies of scale; patterns of trade; GATT; NAFTA; EC; trade diversion; resources; emissions; protectionism; returns to scale; interdependence; global environment;
    All these keywords.

    JEL classification:

    • F18 - International Economics - - Trade - - - Trade and Environment
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

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