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Trading arrangements and industrial development

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  • Puga, Diego
  • Venables, Tony

Abstract

This paper outlines a new approach for analysing the role of trade in promoting industrial development. It offers an explanation as to why firms are reluctant to move to economics with lower labour costs, and shows how trade liberalisation can change the incentives for firms to locate in developing countries. Unilaterally liberalising imports of manufcatures can promote industrialisation, but membership of a preferential trading arrangement is likley to create larger gains. South-South PTAs will be sensitive to the market size of member states, while North-South PTAs seem to offer better prospects- for participating Southern economies, if not for excluded countries.

Suggested Citation

  • Puga, Diego & Venables, Tony, 1996. "Trading arrangements and industrial development," LSE Research Online Documents on Economics 2284, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:2284
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    File URL: http://eprints.lse.ac.uk/2284/
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    References listed on IDEAS

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    6. Puga, Diego & Venables, Anthony J., 1997. "Preferential trading arrangements and industrial location," Journal of International Economics, Elsevier, vol. 43(3-4), pages 347-368, November.
    7. Puga, Diego & Venables, Anthony J., 1996. "The Spread of Industry: Spatial Agglomeration in Economic Development," Journal of the Japanese and International Economies, Elsevier, vol. 10(4), pages 440-464, December.
    8. Hanson, Gordon H., 1998. "Regional adjustment to trade liberalization," Regional Science and Urban Economics, Elsevier, vol. 28(4), pages 419-444, July.
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    10. Baldwin, Richard E. & Venables, Anthony J., 1995. "Regional economic integration," Handbook of International Economics, in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 31, pages 1597-1644, Elsevier.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    preferential arrangements; industrialisation; development; linkages;
    All these keywords.

    JEL classification:

    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation

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