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Hubs and Spokes, and Free Trade in the Americas

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  • Carsten Kowalczyk
  • Ronald J. Wonnacott

Abstract

This paper compares two possible formats for free trade in the Americas: a system of spokes surrounding a U.S. hub, and a free trade area. The paper identifies the sources of welfare change, and it argues that a country's attitude towards a system depends on whether the arrangement is a complement or a substitute trading club. The paper argues also that rent-seeking activities, and costs of administration and transportation, are likely to be higher in a hub-and-spoke system than in a free trade area.

Suggested Citation

  • Carsten Kowalczyk & Ronald J. Wonnacott, 1992. "Hubs and Spokes, and Free Trade in the Americas," NBER Working Papers 4198, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:4198
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    File URL: http://www.nber.org/papers/w4198.pdf
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    References listed on IDEAS

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    1. Ronald J. Wonnacott, 1975. "Canada's Future in a World of Trade Blocs: A Proposal," Canadian Public Policy, University of Toronto Press, vol. 1(1), pages 118-130, Winter.
    2. Jones, Ronald W, 1969. "Tariffs and Trade in General Equilibrium: Comment," American Economic Review, American Economic Association, vol. 59(3), pages 418-424, June.
    3. David Cox & Richard G. Harris, 1986. "A Quantitative Assessment of the Economic Impact on Canada of Sectoral Free Trade with the United States," Canadian Journal of Economics, Canadian Economics Association, vol. 19(3), pages 377-394, August.
    4. Ronald J. Wonnacott, 1982. "Controlling Trade and Foreign Investment in the Canadian Economy: Some Proposals," Canadian Journal of Economics, Canadian Economics Association, vol. 15(4), pages 567-585, November.
    5. Carsten Kowalczyk, 1990. "Welfare and Customs Unions," NBER Working Papers 3476, National Bureau of Economic Research, Inc.
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    Citations

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    Cited by:

    1. Furusawa, Taiji & Konishi, Hideo, 2007. "Free trade networks," Journal of International Economics, Elsevier, vol. 72(2), pages 310-335, July.
    2. Carsten Kowalczyk & Raymond Riezman, 2009. "Trade Agreements," CESifo Working Paper Series 2660, CESifo Group Munich.
    3. Soo Yuen Chong & Jung Hur, 2007. "Overlapping Free Trade Agreements of Singapore-USA-Japan : A Computational Analysis," Trade Working Papers 21931, East Asian Bureau of Economic Research.
    4. 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.
    5. Kevin Gallagher, 2011. "Trading Away Stability and Growth: United States Trade Agreements in Latin America," Working Papers wp266, Political Economy Research Institute, University of Massachusetts at Amherst.
    6. Soo Yuen Chong & Jung Hur, 2008. "Small Hubs, Large Spokes and Overlapping Free Trade Agreements," The World Economy, Wiley Blackwell, vol. 31(12), pages 1625-1665, December.
    7. Stibora, Joachim & de Vaal, Albert, 2006. "Hub and spoke bilateralism and the global income distribution," Economics Discussion Papers 2006-7, School of Economics, Kingston University London.
    8. Deltas, George & Desmet, Klaus & Facchini, Giovanni, 2006. "Hub-and-Spoke Free Trade Areas," CEPR Discussion Papers 5960, C.E.P.R. Discussion Papers.
    9. Ronald J. Wonnacott, 2011. "Preferential Liberalisation in a Hub-and-Spoke Configuration versus a Free Trade Area," Chapters,in: International Handbook on the Economics of Integration, Volume I, chapter 6 Edward Elgar Publishing.
    10. Hideo Konishi & Carsten Kowalczyk & Tomas Sjostrom, 2003. "Free Trade, Customs Unions, and Transfers," Boston College Working Papers in Economics 568, Boston College Department of Economics.
    11. Jiyun Cao, 2015. "The Consideration Of Hub-And-Spoke Status In Fta Formation," Bulletin of Economic Research, Wiley Blackwell, vol. 67(4), pages 382-392, October.
    12. Hiroshi Mukunoki & Kentaro Tachi, 2006. "Multilateralism and Hub-and-Spoke Bilateralism," Review of International Economics, Wiley Blackwell, vol. 14(4), pages 658-674, September.
    13. 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.
    14. Pasadilla, Gloria O., 2004. "East Asian Cooperation: The ASEAN View," Discussion Papers DP 2004-27, Philippine Institute for Development Studies.
    15. Halis Murat Yildiz, 2014. "Hub and spoke trade agreements under oligopoly with asymmetric costs," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 23(1), pages 97-110, February.
    16. Souleymane COULIBALY, 2006. "Persistent Uneven Spread of Economic Activities within Developing RIAs," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 06.01, Université de Lausanne, Faculté des HEC, DEEP.
    17. Iván Martín, 2004. "La inversión extranjera directa en los países del Maghreb en el marco de la Asociación Euromediterránea: ¿el eslabón perdido?," International Trade 0405001, EconWPA.
    18. Jinsoo Park, 2015. "Korea’s linkage strategy between FTA hub policy and middle power leadership in regional economic integration," Asia Europe Journal, Springer, vol. 13(4), pages 379-394, December.

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