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Global Production and Trade: Factor Migration and Commercial Policy with International Scale Economies

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  • Francois, Joseph F

Abstract

Spillover effects associated with international scale economies are an immediate result of global and regional integration of industries and have important implications for commercial policy. In this paper, a general, dual model of trade under international scale economies is developed and applied to examine foreign investment, labor migration, and commercial policy. Notwithstanding the intuition of policymakers, protection is not a second-best alternative to direct assistance. It reduces the efficiency of the protected sectors by hindering integration and can only improve national welfare through terms-of-trade related effects, somewhat along the line of classic optimal tariff arguments. Copyright 1994 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

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  • Francois, Joseph F, 1994. "Global Production and Trade: Factor Migration and Commercial Policy with International Scale Economies," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 35(3), pages 565-581, August.
    • Handle: RePEc:ier:iecrev:v:35:y:1994:i:3:p:565-81
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    Cited by:

    1. Anwar, Sajid, 2005. "Variable labour supply, specialisation-based external economies, and capital inflow," International Review of Economics & Finance, Elsevier, vol. 14(4), pages 427-437.
    2. Nobuhito Suga, 2005. "International Economies of Scale and the Gains from Trade," Journal of Economics, Springer, vol. 85(1), pages 73-97, July.
    3. Schiff, Maurice, 1999. "Trade, migration, and welfare : the impact of social capital," Policy Research Working Paper Series 2044, The World Bank.
    4. Joseph F. Francois & Douglas Nelson, 2002. "A Geometry Of Specialisation," Economic Journal, Royal Economic Society, vol. 112(481), pages 649-678, July.
    5. Francois, Joseph & Nelson, Douglas & Grier, Kevin Blaine, 2004. "Globalization, Roundaboutness and Relative Wages," CEPR Discussion Papers 4406, C.E.P.R. Discussion Papers.
    6. Holtz-Eakin, Douglas & Lovely, Mary E., 1996. "Technological linkages, market structure, and production policies," Journal of Public Economics, Elsevier, vol. 61(1), pages 73-86, July.
    7. Sajid Anwar, 2001. "Commercial policy and international factor mobility in the presence of monopolistic competition," Journal of Economics, Springer, vol. 74(3), pages 259-281, October.
    8. Sajid Anwar, 2004. "Capital Inflow in the Presence of Endogenous Labour Supply and Monopolistic Competition," The Economic Record, The Economic Society of Australia, vol. 80(s1), pages 76-82, September.
    9. Spinanger, Dean & Francois, Joseph F. & Glismann, Hans H., 2000. "The Cost of EU Trade Protection in Textiles and Clothing," Kiel Working Papers 997, Kiel Institute for the World Economy (IfW Kiel).

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