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One trading world, or many: the issue of regional trading blocs

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  • Norman S. Fieleke

Abstract

Over the past several decades, more and more countries have entered into preferential trading arrangements, provoking concern that the benefits of free trade are being sacrificed to growing discrimination. Just how widespread is this discrimination in international trade, and is it \"legitimate\" under the codes of international behavior to which countries generally subscribe? What does economic theory tell us about the likely consequences of such discrimination, and why do so many nations engage in it? ; The author finds that most of the preferential trading arrangements, accounting for about two-thirds of world trade, have increasingly resembled \"trading blocs,\" in that their trade has become oriented more inward, among the members, and less outward, with the rest of the world. Over the long run, he points out, nondiscriminatory reductions in trade barriers are clearly preferable to discriminatory reductions. But should global negotiations fail, blocs that truly liberalized trade among themselves could improve the general welfare. To set the best example for the rest of the trading world, they should be receptive to new members, for the ideal free trade area is worldwide in scope.

Suggested Citation

  • Norman S. Fieleke, 1992. "One trading world, or many: the issue of regional trading blocs," New England Economic Review, Federal Reserve Bank of Boston, issue May, pages 3-20.
  • Handle: RePEc:fip:fedbne:y:1992:i:may:p:3-20
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    File URL: http://www.bostonfed.org/economic/neer/neer1992/neer392a.pdf
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    References listed on IDEAS

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    Cited by:

    1. Jones, Michael, 1995. "Bilateralism on balance," International Review of Economics & Finance, Elsevier, vol. 4(1), pages 37-56.
    2. Jeffrey Frankel, Ernesto Stein and Shang-jin Wei., 1994. "Trading Blocs: The Natural, the Unnatural, and the Super-Natural," Center for International and Development Economics Research (CIDER) Working Papers C94-034, University of California at Berkeley.
    3. Pemberton, Carlisle A. & Ames, Glenn C.W. & Houston, Jack E. & Park, Timothy A., 2000. "Trade Liberalization Of The Food Industry In The Caribbean: The Future Of Preferential Trade Agreements In The Caricom Region," Farm and Business - The Journal of the Caribbean Agro-Economic Society, Caribbean Agro-Economic Society, vol. 4(1), pages 1-19, March.
    4. Dornbusch, Rüdiger, 1995. "North-South trade relations in the Americas: the case for free trade," Coediciones, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 1411.
    5. Jeffrey A. Frankel, 1993. "Is Japan Creating a Yen Bloc in East Asia and the Pacific?," NBER Chapters, in: Regionalism and Rivalry: Japan and the United States in Pacific Asia, pages 53-88, National Bureau of Economic Research, Inc.
    6. Wei, Shang-Jin, 1999. "Currency hedging and goods trade," European Economic Review, Elsevier, vol. 43(7), pages 1371-1394, June.
    7. Frankel, Jeffrey & Stein, Ernesto & Wei, Shang-jin, 1995. "Trading blocs and the Americas: The natural, the unnatural, and the super-natural," Journal of Development Economics, Elsevier, vol. 47(1), pages 61-95, June.
    8. S Corbridge, 1994. "Bretton Woods Revisited: Hegemony, Stability, and Territory," Environment and Planning A, , vol. 26(12), pages 1829-1859, December.
    9. Jeffrey A. Frankel & Ernesto Stein & Shang-Jin Wei, 1998. "Continental Trading Blocs: Are They Natural or Supernatural?," NBER Chapters, in: The Regionalization of the World Economy, pages 91-120, National Bureau of Economic Research, Inc.
    10. Wei, Shang-Jin & Frankel, Jeffrey A., 1996. "Can regional blocs be a stepping stone to global free trade? a political economy analysis," International Review of Economics & Finance, Elsevier, vol. 5(4), pages 339-347.

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