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Trade liberalization by less developed countries with a large market size: meager welfare gains?

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  • Adolfo Cristobal Campoamor

    (Universidad Loyola Andalucia)

Abstract

In this paper we present a one-sector Dixit-Stiglitz-Krugman model of North-South trade, in order to evaluate the welfare and convergence implications of a gradual, bilateral trade liberalization. Using the same formal setting that generated the “new trade theory†wave, we show that a poorer and technologically disadvantaged South may diverge in welfare terms with the North, provided that its population and market size were large enough. Both regional blocks are shown to benefit from freer trade in absolute terms.

Suggested Citation

  • Adolfo Cristobal Campoamor, 2019. "Trade liberalization by less developed countries with a large market size: meager welfare gains?," Economics Bulletin, AccessEcon, vol. 39(2), pages 1309-1317.
    • Handle: RePEc:ebl:ecbull:eb-19-00065
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    International Trade; North-South Inequality; Welfare Analysis;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty

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