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Assessing the Effects of Trade Liberalisation: A Critical Examination

Author

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  • Frank Ackerman

Abstract

Computable general equilibrium (CGE) models of world trade, often presented as demonstrating the benefits of trade liberalization, are now making rather less promising forecasts than they used to just a few years ago. The estimated benefits are not only smaller in the aggregate, but also skewed toward the developed countries; the expected contribution of trade liberalization to economic development and poverty alleviation is extremely limited. Calculation of the benefits to be expected of services liberalization, trade facilitation measures, and long-term productivity gains from trade liberalization remains problematical and speculative. The empirical limitations of CGE forecasts stem from broader theoretical weaknesses: the models are largely locked within a static framework and, oddly, assume that trade policy causes no changes in total employment, upwards or downwards (??). Models built on more adequate theories, which have only recently begun to appear, could offer a very different picture of the effects of trade liberalization.

Suggested Citation

  • Frank Ackerman, 2006. "Assessing the Effects of Trade Liberalisation: A Critical Examination," QA - Rivista dell'Associazione Rossi-Doria, Associazione Rossi Doria, issue 3, July.
  • Handle: RePEc:rar:journl:0037
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    File URL: http://www.francoangeli.it/riviste/Scheda_Riviste.asp?IDArticolo=28580&Tipo=Articolo%20PDF
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    References listed on IDEAS

    as
    1. Frank Ackerman, 2001. "Still dead after all these years: interpreting the failure of general equilibrium theory," Journal of Economic Methodology, Taylor & Francis Journals, pages 119-139.
    2. Hertel, Thomas & Hummels, David & Ivanic, Maros & Keeney, Roman, 2007. "How confident can we be of CGE-based assessments of Free Trade Agreements?," Economic Modelling, Elsevier, vol. 24(4), pages 611-635, July.
    3. Antoine Bouët & Jean-Christophe Bureau & Yvan Decreux & Sébastien Jean, 2005. "Multilateral Agricultural Trade Liberalisation: The Contrasting Fortunes of Developing Countries in the Doha Round," The World Economy, Wiley Blackwell, vol. 28(9), pages 1329-1354, September.
    4. Paul Oslington, 2005. "Unemployment and Trade Liberalisation," The World Economy, Wiley Blackwell, vol. 28(8), pages 1139-1155, August.
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    Citations

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    Cited by:

    1. Shahid Yusuf & Kaoru Nabeshima, 2010. "Changing the Industrial Geography in Asia : The Impact of China and India," World Bank Publications, The World Bank, number 13544.
    2. Gabriel Felbermayr & Mario Larch & Finn Krüger & Lisandra Flach & Erdal Yalcin & Sebastian Benz, 2013. "Dimensionen und Auswirkungen eines Freihandelsabkommens zwischen der EU und den USA," ifo Forschungsberichte, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 62, October.
    3. Sebastian Benz & Erdal Yalcin, 2013. "Quantifying the Economic Effects of an EU-Japan Free Trade Agreement," CESifo Working Paper Series 4319, CESifo Group Munich.

    More about this item

    Keywords

    Trade Liberalization; Computable General; Equilibrium Models; Poverty;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade

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