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05-01 "The Shrinking Gains from Trade: A Critical Assessment of Doha Round Projections"

  • Frank Ackerman

Computable general equilibrium (CGE) models of world trade, often presented as demonstrating the benefits of trade liberalization, now make much more modest forecasts than they did just a few years ago. The estimated benefits are not only small in the aggregate, but also skewed toward developed countries; the expected contribution of trade liberalization to economic development and poverty alleviation is extremely limited. Related calculations, for the expected benefits of services liberalization, trade facilitation measures, and long-term productivity gains from trade liberalization, remain problematical and/or speculative. The empirical limitations of CGE forecasts rest on broader theoretical weaknesses: the models are largely locked within a static framework, and remarkably assume that trade policy causes no changes in total employment, up or down. Models built on more adequate theories, which have only begun to appear, would paint a very different picture of the effects of trade liberalization.

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Paper provided by GDAE, Tufts University in its series GDAE Working Papers with number 05-01.

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Handle: RePEc:dae:daepap:05-01
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  1. Werner Antweiler & Daniel Trefler, 2002. "Increasing Returns and All That: A View from Trade," American Economic Review, American Economic Association, vol. 92(1), pages 93-119, March.
  2. Andrew H. Charlton & Joseph E. Stiglitz, 2005. "A Development-friendly Prioritisation of Doha Round Proposals," The World Economy, Wiley Blackwell, vol. 28(3), pages 293-312, 03.
  3. Francois, Joseph & van Meijl, Hans & van Tongeren, Frank, 2003. "Trade Liberalization and Developing Countries Under the Doha Round," CEPR Discussion Papers 4032, C.E.P.R. Discussion Papers.
  4. Jean-Christophe Bureau & Antoine Bouet, Yvan Decreux, Sébastien Jean, 2005. "Multilateral agricultural trade liberalization: The contrasting fortunes of developing countries in the Doha Round," The Institute for International Integration Studies Discussion Paper Series iiisdp060, IIIS.
  5. Hertel, Thomas & David Hummels & Maros Ivanic & Roman Keeney, 2003. "How Confident Can We Be in CGE-Based Assessments of Free Trade Agreements?," GTAP Working Papers 1324, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
  6. Anderson, Kym & Martin, Will & van der Mensbrugghe, Dominique, 2005. "Global impacts of Doha trade reform scenarios on poverty," Policy Research Working Paper Series 3735, The World Bank.
  7. Drusilla K. Brown & Alan V. Deardorff & Robert M Stern, 2002. "Computational Analysis of Multilateral Trade Liberalization in the Uruguay Round and Doha Development Round," Working Papers 489, Research Seminar in International Economics, University of Michigan.
  8. Frank Ackerman, 2001. "Still dead after all these years: interpreting the failure of general equilibrium theory," Journal of Economic Methodology, Taylor & Francis Journals, vol. 9(2), pages 119-139.
  9. J. Francois & H. van Meijl & F. van Tongeren, 2003. "Trade Liberalization and Developing Countries under the Doha Round," Tinbergen Institute Discussion Papers 03-060/2, Tinbergen Institute, revised 30 Aug 2003.
  10. William R. Cline, 2004. "Trade Policy and Global Poverty," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 379.
  11. Stephen Tokarick, 2005. "Who Bears the Cost of Agricultural Support in OECD Countries?," The World Economy, Wiley Blackwell, vol. 28(4), pages 573-593, 04.
  12. Paul Oslington, 2005. "Unemployment and Trade Liberalisation," The World Economy, Wiley Blackwell, vol. 28(8), pages 1139-1155, 08.
  13. Anderson, Kym & Martin, Will, 2005. "Agricultural trade reform and the Doha development agenda," Policy Research Working Paper Series 3607, The World Bank.
  14. Krugman, Paul R, 1987. "Is Free Trade Passe?," Journal of Economic Perspectives, American Economic Association, vol. 1(2), pages 131-44, Fall.
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