IDEAS home Printed from https://ideas.repec.org/p/cen/wpaper/97-16.html
   My bibliography  Save this paper

An Applied General Equilibrium Model Of Moroccan Trade Liberalization Featuring External Economies

Author

Listed:
  • C J Krizan

Abstract

Since the 1920's economists have wrestled with the effects of external economies on trade liberalization. In this paper I show that under extreme conditions, externalities can reverse the gains from trade found in perfectly competitive trade models. However, the externalities needed to generate this result, even under the worst possible conditions (all expanding industries are subject to negative externalities, all contracting industries have positive externalities) are orders of magnitude larger than those estimated in Krizan (1997). This suggests that the presence of external economies of scale does not provide a credible argument for protectionism. On the other hand, the CGE model showed that external effects can increase the welfare gains from trade liberalization, but the combined effect is still small compared to other policy options. This finding contrasts sharply with many models featuring internal returns to scale that are able to generate large welfare benefits from trade liberalization.

Suggested Citation

  • C J Krizan, 1997. "An Applied General Equilibrium Model Of Moroccan Trade Liberalization Featuring External Economies," Working Papers 97-16, Center for Economic Studies, U.S. Census Bureau.
    • Handle: RePEc:cen:wpaper:97-16
    as

    Download full text from publisher

    File URL: https://www2.census.gov/ces/wp/1997/CES-WP-97-16.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
    2. James R. Markusen, 1990. "Micro-foundations of External Economies," Canadian Journal of Economics, Canadian Economics Association, vol. 23(3), pages 495-508, August.
    3. Elhanan Helpman & Paul Krugman, 1987. "Market Structure and Foreign Trade: Increasing Returns, Imperfect Competition, and the International Economy," MIT Press Books, The MIT Press, edition 1, volume 1, number 026258087x, December.
    4. Ethier, Wilfred, 1979. "Internationally decreasing costs and world trade," Journal of International Economics, Elsevier, vol. 9(1), pages 1-24, February.
    5. Paul Krugman, 1991. "History versus Expectations," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(2), pages 651-667.
    6. Rutherford, Thomas F. & Rutstrom, E.E. & Tarr, David, 1993. "Morocco's free trade agreement with the European community : a quantitative assessment," Policy Research Working Paper Series 1173, The World Bank.
    7. F. H. Knight, 1924. "Some Fallacies in the Interpretation of Social Cost," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 38(4), pages 582-606.
    8. Venables, Anthony J, 1987. "Trade and Trade Policy with Differentiated Products: A Chamberlinian-Ricardian Model," Economic Journal, Royal Economic Society, vol. 97(387), pages 700-717, September.
    9. Helpman, Elhanan, 1984. "Increasing returns, imperfect markets, and trade theory," Handbook of International Economics, in: R. W. Jones & P. B. Kenen (ed.), Handbook of International Economics, edition 1, volume 1, chapter 7, pages 325-365, Elsevier.
    10. Paul Krugman, 1992. "Geography and Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262610868, December.
    11. Frank D. Graham, 1923. "Some Aspects of Protection Further Considered," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 37(2), pages 199-227.
    12. Rotemberg, Julio J. & Saloner, Garth, 2000. "Competition and human capital accumulation: a theory of interregional specialization and trade," Regional Science and Urban Economics, Elsevier, vol. 30(4), pages 373-404, July.
    13. Frank H. Knight, 1925. "On Decreasing Cost and Comparative Cost: A Rejoinder," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 39(2), pages 331-333.
    14. Tybout, James R, 1993. "Internal Returns to Scale as a," American Economic Review, American Economic Association, vol. 83(2), pages 440-444, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. C J Krizan, 1998. "Industrial Spillovers In Developing Countries: Plant-Level Evidence From Chile, Mexico And Morocco," Working Papers 98-2, Center for Economic Studies, U.S. Census Bureau.
    2. Alan V. Deardorff & Robert M. Stern, 2004. "EU Expansion and EU Growth," International Economic Association Series, in: Alan V. Deardorff (ed.), The Past, Present and Future of the European Union, chapter 5, pages 74-102, Palgrave Macmillan.
    3. Denis Delgay-Troïse, 1993. "Distorsions sur les marchés des facteurs et évolution des spécialisations internationales," Revue Économique, Programme National Persée, vol. 44(1), pages 51-70.
    4. Joseph F. Francois & Douglas Nelson, 2002. "A Geometry Of Specialisation," Economic Journal, Royal Economic Society, vol. 112(481), pages 649-678, July.
    5. Helpman, Elhanan, 1989. "Monopolistic Competition in Trade Theory," Foerder Institute for Economic Research Working Papers 275470, Tel-Aviv University > Foerder Institute for Economic Research.
    6. Ambler, Steve & Cardia, Emanuela & Farazli, Jeannine, 1999. "Export promotion, learning by doing and growth," Journal of Economic Dynamics and Control, Elsevier, vol. 23(5-6), pages 747-772, April.
    7. Rotemberg, Julio J. & Saloner, Garth, 2000. "Competition and human capital accumulation: a theory of interregional specialization and trade," Regional Science and Urban Economics, Elsevier, vol. 30(4), pages 373-404, July.
    8. Sebastian Benz & Wilhelm Kohler, 2014. "Managerial versus Production Wages: Offshoring, Country Size, and Endowments," Canadian Journal of Economics, Canadian Economics Association, vol. 47(1), pages 250-271, February.
    9. Luca, Spinesi, 2005. "Vertical and Horizontal Innovation : Effects of Globalization and Migration on Inequality, Growth and Human Capital Accumulation," Discussion Papers (ECON - Département des Sciences Economiques) 2005028, Université catholique de Louvain, Département des Sciences Economiques.
    10. Azariadis, Costas & Stachurski, John, 2005. "Poverty Traps," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 5, Elsevier.
    11. Philippe Michel & Antoine d'Autume, 1993. "Hystérésis et piège du sous-développement dans un modèle de croissance endogène," Revue Économique, Programme National Persée, vol. 44(2), pages 431-450.
    12. Dekle, Robert & Eaton, Jonathan, 1999. "Agglomeration and Land Rents: Evidence from the Prefectures," Journal of Urban Economics, Elsevier, vol. 46(2), pages 200-214, September.
    13. Carlino, Gerald & Kerr, William R., 2015. "Agglomeration and Innovation," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 349-404, Elsevier.
    14. Philip L. Brock, 2009. "Collateral Constraints and Macroeconomic Adjustment in an Open Economy," Working Papers UWEC-2009-03, University of Washington, Department of Economics.
    15. Kaneda, Mitsuhiro, 2003. "Policy designs in a dynamic model of infant industry protection," Journal of Development Economics, Elsevier, vol. 72(1), pages 91-115, October.
    16. Edward L. Glaeser, 1998. "Are Cities Dying?," Journal of Economic Perspectives, American Economic Association, vol. 12(2), pages 139-160, Spring.
    17. Desdoigts, Alain & Jaramillo, Fernando, 2009. "Trade, demand spillovers, and industrialization: The emerging global middle class in perspective," Journal of International Economics, Elsevier, vol. 79(2), pages 248-258, November.
    18. Joe Tharakan & Jean‐Philippe Tropeano, 2009. "On The Impact Of Labor Market Matching On Regional Disparities," Journal of Regional Science, Wiley Blackwell, vol. 49(1), pages 57-80, February.
    19. William R. Kerr & Scott Duke Kominers, 2015. "Agglomerative Forces and Cluster Shapes," The Review of Economics and Statistics, MIT Press, vol. 97(4), pages 877-899, October.
    20. Boiscuvier, Éléonore, 2001. "Innovation, intégration et développement régional," L'Actualité Economique, Société Canadienne de Science Economique, vol. 77(2), pages 255-280, juin.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cen:wpaper:97-16. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dawn Anderson (email available below). General contact details of provider: https://edirc.repec.org/data/cesgvus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.