Intégration régionale Sud-Sud et répartition intra-zone des activités
Relying on a three-country model of economic geography (one Northern and two Southern countries), this paper analyzes the effects of South-South regional integration on the location of industry inside the area. A comparison between different trading arrangements shows that in the absence of cooperation, a developing country can promote industrialization and improve its welfare by unilateral trade liberalization. However, the benefits of unilateral liberalization seem to hold only in a context where the other developing country maintains unilateral protectionism. When instead there is cooperation among the Southern countries, the customs union seems to be the best option because a South-South liberalization coupled with protection vis-à-vis of the North improves the production structures and welfare levels without asymmetry among the integrating countries. However, while the formation of a customs union area benefits the integrating region as a whole according to the industry size, some member countries may be reluctant to apply a common tariff outside the area from the point of view of welfare. This result, the so-called prisoner?'s dilemma, displays difficulties in implementing a customs union. Finally, our paper highlights the costs resulting from no cooperation : by implementing trade protection against each other, the Southern countries would deteriorate their performance both in terms of industrialization and welfare, while accentuating their trade dependence vis-à-vis of the North.Classification JEL : F12, F15, O10, R10
When requesting a correction, please mention this item's handle: RePEc:cai:recosp:reco_551_0041. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jean-Baptiste de Vathaire)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.