Distribution of Benefits from Regional Trade Liberalisation among Country Partners in the presence of Transnational Corporations

It has long been appreciated that regional trade arrangements may have important distributive effects. These may arise at three levels: first, among factor owners or social classes within each country; second, between the partner countries (individually or as a group) and the rest of the world; and third, among the partner countries themselves. But in spite of the relatively numerous passing references made to the importance of this issue— especially for developing countries — there have been few systematic studies. Similar concern has been expressed about the role played by transnational corporations in the economic integration processes. The main preoccupation has been with foreign transnationals’ capturing an ‘unduly’ large share of the benefits from regional trade liberalisation among developing countries. In practice, in some Latin American groups, such as the Andean Common Market, that preoccupation has led to the implementation of very specific foreign investment policies as a central component of the overall integration strategy.