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Trade regimes and GATT: resource-intensive vs. knowledge intensive growth

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  • Chichilnisky, Graciela

Abstract

Trading blocks can help or hinder the liberalization of world trade. A determining factor is whether trade within the block is organized around traditional comparative advantages, or around economies of scale. Regional free trade agreements such as NAFTA can be a substitutes for global free trade when they are based on traditional comparative advantages; then each regional market develops market power and incentives to impose tariffs on the rest of the word. Alternatively, regional trade agreements can be complementary to global free trade. This occurs when the blocks are organized around the exploitation of economies of scale and based on knowledge-intensive sectors. I establish that external economies of scale produce incentives for expanded trade; they can defeat the standard argument for "optimal tariffs" and mitigate another negative feature of trading blocks: their tendency to divert trade from efficient to inefficient sources. The emergence of regional blocks organized around economies of scale can therefore lead to increasingly open international markets. I discuss policy implications for the EU and for free trade in the Americas.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 8493.

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Date of creation: 1996
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Handle: RePEc:pra:mprapa:8493

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Related research

Keywords: international trade; global policy; trade policy; trading blocks; economies of scale;

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References

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  1. Chichilnisky, G., 1993. "North-South Trade and the Dynamics of Renewable Resources," Discussion Papers 1993_02, Columbia University, Department of Economics.
  2. repec:fth:coluec:644 is not listed on IDEAS
  3. Kennan, John & Riezman, Raymond, 1988. "Do Big Countries Win Tariff Wars?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 29(1), pages 81-85, February.
  4. Lloyd A. Metzler, 1949. "Tariffs, the Terms of Trade, and the Distribution of National Income," Journal of Political Economy, University of Chicago Press, vol. 57, pages 1.
  5. Chichilnisky, Graciela, 1994. "North-South Trade and the Global Environment," American Economic Review, American Economic Association, vol. 84(4), pages 851-74, September.
  6. Chichilnisky, Graciela, 1986. "A general equilibrium theory of North-South trade," MPRA Paper 8810, University Library of Munich, Germany.
  7. Ethier, Wilfred J, 1982. "Decreasing Costs in International Trade and Frank Graham's Argument for Protection," Econometrica, Econometric Society, vol. 50(5), pages 1243-68, September.
  8. Chichilnisky, Graciela, 1981. "Terms of trade and domestic distribution : Export-led growth with abundant labour," Journal of Development Economics, Elsevier, vol. 8(2), pages 163-192, April.
  9. Chichilnisky,Graciela & Heal,Geoffrey M., 1987. "The Evolving International Economy," Cambridge Books, Cambridge University Press, number 9780521267168, October.
  10. Riezman, Raymond, 1985. "Customs unions and the core," Journal of International Economics, Elsevier, vol. 19(3-4), pages 355-365, November.
  11. Barbier, E B & Burgess, J C, 2001. " The Economics of Tropical Deforestation," Journal of Economic Surveys, Wiley Blackwell, vol. 15(3), pages 413-33, July.
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Citations

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Cited by:
  1. Graciela Chichilnisky, 1998. "The knowledge revolution," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 7(1), pages 39-54.
  2. Chichilnisky, Graciela & Gallopin, G., 2000. "The environmental impact of globalization on Latin America: a prospective approach," MPRA Paper 8440, 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. Lübcke, Britta & Piazolo, Daniel, 1998. "Wohlfahrtseffekte einer nordatlantischen Handelsliberalisierung," Kiel Working Papers 885, Kiel Institute for the World Economy.

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