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Preferential Trade Arrangements, Induced Investment, and National Income in a Heckscher-Ohlin-Ramsey Model

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  • Francois, Joseph

Abstract

We develop a Heckscher-Ohlin-Ramsey model, combining dual techniques with classic geometric techniques from trade theory. This framework is used to explore the long-run general equilibrium effects of regional integration (preferential trade agreements). Emphasis is placed on positive mechanics related to adjustment in the capital stock, long-run changes in the pattern in trade, and the implications for changes in long-run (steady-state) national income. The importance of relative country size and the dynamic implications for third countries are also addressed.

Suggested Citation

  • Francois, Joseph, 2000. "Preferential Trade Arrangements, Induced Investment, and National Income in a Heckscher-Ohlin-Ramsey Model," CEPR Discussion Papers 2535, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:2535
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    References listed on IDEAS

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    1. Richard Baldwin, 1989. "The Growth Effects of 1992," NBER Working Papers 3119, National Bureau of Economic Research, Inc.
    2. Manning, Richard & Markusen, James R, 1991. "National Product Functions in Comparative Steady-State Analysis," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 32(3), pages 613-625, August.
    3. Johnson, Harry G., 1971. "Trade and growth : A geometrical exposition," Journal of International Economics, Elsevier, vol. 1(1), pages 83-101, February.
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    5. Baxter, Marianne, 1992. "Fiscal Policy, Specialization, and Trade in the Two-Sector Model: The Return of Ricardo?," Journal of Political Economy, University of Chicago Press, vol. 100(4), pages 713-744, August.
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    7. Fernandez, Raquel & Portes, Jonathan, 1998. "Returns to Regionalism: An Analysis of Nontraditional Gains from Regional Trade Agreements," World Bank Economic Review, World Bank Group, vol. 12(2), pages 197-220, May.
    8. Ricardo, David, 1821. "On the Principles of Political Economy and Taxation," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, edition 3, number ricardo1821.
    9. Kenā€ichi Inada, 1968. "Free Trade, Capital Accumulation and Factor Price Equalization," The Economic Record, The Economic Society of Australia, vol. 44(3), pages 322-341, September.
    10. Wonnacott, Paul & Wonnacott, Ronald, 1981. "Is Unilateral Tariff Reduction Preferable to a Customs Union? The Curious Case of the Missing Foreign Tariffs," American Economic Review, American Economic Association, vol. 71(4), pages 704-714, September.
    11. Ethier, Wilfred, 1979. "The theorems of international trade in time-phased economies," Journal of International Economics, Elsevier, vol. 9(2), pages 225-238, May.
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    More about this item

    Keywords

    Heckscher Ohlin Ramsey Model; Preferential Trade Arrangements; Regionalism; Trade And Growth; Trade And Investment;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F15 - International Economics - - Trade - - - Economic Integration
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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