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Small is Beautiful: Preferential Trade Agreements and the Impact of Country Size, Market Share, and Smuggling

Author

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  • Schiff, Maurice

    () (The World Bank)

Abstract

This paper examines two issues: 1) the welfare impact of preferential trade agreements (PTAs), and 2) the effect of structural and policy changes on the welfare impact of PTAs. It is shown that, on the import side, the home country loses from a PTA between small countries (and the PTA as a whole loses as well); and the impact of a PTA on home country welfare is worse the higher the level (and share) of imports from the partner country. The latter result holds both in the small-country and the large- country case. The paper also examines the effects on the welfare impact of PTAs of changes in efficiency, trade policy, smuggling and rules of origin. It is shown that the impact of form - ing a PTA between small countries in the case of smuggling is ambiguous in general.

Suggested Citation

  • Schiff, Maurice, 1997. "Small is Beautiful: Preferential Trade Agreements and the Impact of Country Size, Market Share, and Smuggling," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 12, pages 359-387.
  • Handle: RePEc:ris:integr:0054
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    Citations

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    Cited by:

    1. Kaminski, Bartlomiej & de la Rocha, Manuel, 2003. "Stabilization and association process in the Banlkans : integration options and their assessment," Policy Research Working Paper Series 3108, The World Bank.
    2. Clarete, Ramon & Edmonds, Christopher & Wallack, Jessica Seddon, 2003. "Asian regionalism and its effects on trade in the 1980s and 1990s," Journal of Asian Economics, Elsevier, vol. 14(1), pages 91-129, February.
    3. Anna Maria Mayda & Chad Steinberg, 2009. "Do South-South trade agreements increase trade? Commodity-level evidence from COMESA," Canadian Journal of Economics, Canadian Economics Association, vol. 42(4), pages 1361-1389, November.
    4. Hoekman, Bernard & Konan, Denise Eby, 1999. "Deep integration, nondiscrimination, and Euro-Mediterranean free trade," Policy Research Working Paper Series 2130, The World Bank.
    5. FE, Doukouré Charles, 2011. "Qualité des Institutions et Commerce International: Évidence à Partir des Exportations de l'UEMOA
      [Institutions Quality and International Trade: Evidence from WAEMU Exports]
      ," MPRA Paper 33333, University Library of Munich, Germany.
    6. Obschonka, Martin & Stuetzer, Michael & Rentfrow, Peter J. & Lee, Neil & Gosling, Samuel D. & Schmitt-Rodermund, Eva, 2018. "Fear, populism, and the geopolitical landscape: The “sleeper effect” of neurotic personality traits on regional voting behavior in the 2016 Brexit and Trump votes," MPRA Paper 88404, University Library of Munich, Germany.
    7. Denise Eby Konan & Keith E Maskus, 2000. "Bilateral Trade Patterns and Welfare: An Egypt-EU Preferential Trade Agreement," Working Papers 200001, University of Hawaii at Manoa, Department of Economics.
    8. Aksen Ernest & Tochitskaya Irina, 2004. "Economic Effects of Belarus’ Participation in the CIS Countries Customs Union," EERC Working Paper Series 00-443e, EERC Research Network, Russia and CIS.
    9. World Bank, 2005. "Global Economic Prospects 2005 : Trade, Regionalism and Development," World Bank Publications, The World Bank, number 14783.
    10. Silva, Peri, 2011. "The role of importers and exporters in the determination of the U.S. tariff preferences granted to Latin America," Journal of Development Economics, Elsevier, vol. 94(2), pages 207-219, March.
    11. Khadan, Jeetendra & Hosein, Roger, 2014. "Trade, Economic and Welfare impacts of the CARICOM-Canada Free Trade Agreement," MPRA Paper 54836, University Library of Munich, Germany.
    12. Schiff, Maurice, 2001. "Will the Real “Natural Trading Partner” Please Stand Up?," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 16, pages 245-261.
    13. Grether, Jean-Marie & Olarreaga, Marcelo, 1998. "Preferential and non-preferential trade flows in world trade," WTO Staff Working Papers ERAD-98-10, World Trade Organization (WTO), Economic Research and Statistics Division.
    14. Waldkirch, Andreas, 2006. "The ‘New Regionalism’: Integration as a Commitment Device for Developing Countries," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 21, pages 397-425.
    15. Lucio Castro, 2005. "Regional Trade Integration in East Africa: Trade and Revenue Impacts of the Planned East African Community Customs Union," International Trade 0509005, University Library of Munich, Germany.
    16. Diadié Diaw & Albert Lessoua, 2013. "Natural Resources Exports, Diversification and Economic Growth of CEMAC Countries: On the Impact of Trade with China," African Development Review, African Development Bank, vol. 25(2), pages 189-202, June.
    17. Khadan, Jeetendra & Hosein, Roger, 2014. "Trade, Economic and Welfare impacts of the CARICOM-Canada Free Trade Agreement," MPRA Paper 54836, University Library of Munich, Germany.

    More about this item

    Keywords

    Preferential; Trade; Agreements;

    JEL classification:

    • F10 - International Economics - - Trade - - - General

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