IDEAS home Printed from https://ideas.repec.org/p/fpr/tmddps/90.html
   My bibliography  Save this paper

Scenarios for trade integration in the Americas

Author

Listed:
  • Diao, Xinshen
  • Diaz-Bonilla, Eugenio
  • Robinson, Sherman

Abstract

This paper analyzes two potential trade liberalization scenarios – a Free Trade Area of the Americas (FTAA) and possible links between MERCOSUR and the European Union (EU) – in a world computable general equilibrium (CGE) model. The model also incorporates some macro elements such as a cash- in-advance mechanism and rigidities in wages and exchange rates. The empirical results show that the two alternative regional integration scenarios are good for the participants while have little impact on the non-participants. Both scenarios are net trade creating, as trade creation greatly exceeds trade diversion, and the trade-diversion has relatively minor effects on the affected regions. The gains are larger for the Latin American participants than for their large potential partners – the U.S. and EU. These results are consistent with earlier studies of NAFTA, which also predicted small positive gains for the U.S. and large gains for Mexico. Many countries in Latin America are currently undergoing macroeconomic strains, and growth in the region has slowed. In this environment, external shocks and stabilization and structural adjustment programs are likely to lead to significant swings in trade balances and exchange rates. These issues will have to be considered in acknowledging that it is hard to reap the long-term benefits of trade liberalization in an environment of macroeconomic instability.

Suggested Citation

  • Diao, Xinshen & Diaz-Bonilla, Eugenio & Robinson, Sherman, 2002. "Scenarios for trade integration in the Americas," TMD discussion papers 90, International Food Policy Research Institute (IFPRI).
  • Handle: RePEc:fpr:tmddps:90
    as

    Download full text from publisher

    File URL: http://www.ifpri.org/sites/default/files/publications/tmdp90.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Lewis, Jeffrey D. & Robinson, Sherman & Wang, Zhi, 1995. "Beyond the Uruguay Round: The implications of an Asian free trade area," China Economic Review, Elsevier, vol. 6(1), pages 35-90.
    2. Robinson, Sherman & Thierfelder, Karen, 2002. "Trade liberalisation and regional integration: the search for large numbers," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 46(4), December.
    3. Robinson, Sherman, 1991. "Macroeconomics, financial variables, and computable general equilibrium models," World Development, Elsevier, vol. 19(11), pages 1509-1525, November.
    4. Hinojosa-Ojeda, Raul A. & Robinson, Sherman & Lewis, Jeffrey D., 1995. "Regional integration options for Central America and the Caribbean after NAFTA," The North American Journal of Economics and Finance, Elsevier, vol. 6(2), pages 121-148.
    5. Diaz-Bonilla, Eugenio & Thomas, Marcelle & Robinson, Sherman & Cattaneo, Andrea, 2000. "Food security and trade negotiations in the World Trade Organization," TMD discussion papers 59, International Food Policy Research Institute (IFPRI).
    6. Mary E. Burfisher & Sherman Robinson & Karen Thierfelder, 2001. "The Impact of NAFTA on the United States," Journal of Economic Perspectives, American Economic Association, vol. 15(1), pages 125-144, Winter.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ludena, Carlos E. & Wong, Sara, 2006. "Domestic Support Policies for Agriculture in Ecuador and the U.S.-Andean Countries Free Trade Agreement: An Applied General Equilibrium Assessment," 2006 Annual meeting, July 23-26, Long Beach, CA 21349, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Argüello C., Ricardo & Valenzuela, Ernesto, 2006. "Market access in the Western Hemisphere: implications for the Andean Community," PERFIL DE COYUNTURA ECONÓMICA, UNIVERSIDAD DE ANTIOQUIA - CIE, July.
    3. De Miguel, Carlos J. & Durán Lima, José Elías & Schuschny, Andrés Ricardo, 2007. "Trade agreements by Colombia, Ecuador and Peru with the United States: effects on trade, production and welfare," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), April.
    4. Diao, Xinshen & Diaz-Bonilla, Eugenio & Robinson, Sherman & Orden, David, 2005. "Tell me where it hurts, an' I'll tell you who to call," MTID discussion papers 84, International Food Policy Research Institute (IFPRI).
    5. Alexander Schejtman & Julio A. Berdegué, 2006. "El Impacto Social de la Integración Regional en América Latina Rural," IDB Publications (Working Papers) 2327, Inter-American Development Bank.
    6. Morley, Samuel & Piñeiro, Valeria, 2004. "The effect of WTO and FTAA on agriculture and the rural sector in Latin America," DSGD discussion papers 3, International Food Policy Research Institute (IFPRI).
    7. Teteryatnikova, Mariya, 2008. "R&D in the network of international trade: Multilateral versus regional trade agreements," WTO Staff Working Papers ERSD-2009-03, World Trade Organization (WTO), Economic Research and Statistics Division.
    8. Alexander Schejtman & Julio A. Berdegué, 2006. "El Impacto Social de la Integración Regional en América Latina Rural," IDB Publications (Working Papers) 9125, Inter-American Development Bank.
    9. Turner, James A. & Buongiorno, Joseph & Zhu, Shushuai, 2005. "Effects of the Free Trade Area of the Americas on Forest Resources," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 34(1), April.
    10. Philippidis, G. & Resano, H. & Sanjuán, A.I., 2014. "Shifting Armington trade preferences: A re-examination of the Mercosur–EU negotiations," Economic Modelling, Elsevier, vol. 40(C), pages 21-32.
    11. Pavel Neumann, 2008. "Fragmentation versus Unity of the World Economy," Acta Oeconomica Pragensia, University of Economics, Prague, vol. 2008(2), pages 70-89.

    More about this item

    Keywords

    Trade liberalization. ; Free trade America. ; European Union countries Commercial policy. ; Equilibrium (Economics) Models. ; Latin America Economic conditions. ; TMD ;

    JEL classification:

    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • E1 - Macroeconomics and Monetary Economics - - General Aggregative Models
    • F1 - International Economics - - Trade

    Statistics

    Access and download statistics

    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:fpr:tmddps:90. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: http://edirc.repec.org/data/ifprius.html .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.