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The Welfare Implications of Trading Blocs among Countries with Different Endowments

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  • Antonio Spilimbergo
  • Ernesto Stein

Abstract

In this paper, we present a model where trade is motivated both by preference for variety and comparative advantages. We use this framework to analyze the welfare implications of trading blocs among countries with different endowments with and without transportation costs. In this framework, we address the following issues: a) the welfare implications of the consolidation of the world into a few trading blocs; b) the different incentives that rich and poor countries have in choosing their partners in trade arrangements; c) whether the welfare consequences of continental preferential trade arrangements depend on the relative endowments.

Suggested Citation

  • Antonio Spilimbergo & Ernesto Stein, 1996. "The Welfare Implications of Trading Blocs among Countries with Different Endowments," NBER Working Papers 5472, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:5472
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    References listed on IDEAS

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    1. Bond, E.W. & Syropoulos, C., 1993. "Optimality and Stability of Regional Trading Blocs," Papers 5-93-2, Pennsylvania State - Department of Economics.
    2. Alan V. Deardorff & Robert M. Stern, 2009. "Multilateral Trade Negotiations and Preferential Trading Arrangements," World Scientific Book Chapters, in: Globalization And International Trade Policies, chapter 6, pages 153-210, World Scientific Publishing Co. Pte. Ltd..
    3. Elhanan Helpman & Assaf Razin (ed.), 1991. "International Trade and Trade Policy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262081997, December.
    4. Jeffrey A. Frankel & Ernesto Stein, 1994. "The welfare implications of continental trading blocs in a model with transport costs," Pacific Basin Working Paper Series 94-03, Federal Reserve Bank of San Francisco.
    5. Spilimbergo, Antonio, 2000. "Growth and Trade: The North Can Lose," Journal of Economic Growth, Springer, vol. 5(2), pages 131-146, June.
    6. Levy, Philip I, 1997. "A Political-Economic Analysis of Free-Trade Agreements," American Economic Review, American Economic Association, vol. 87(4), pages 506-519, September.
    7. Jon D. Haveman, 1996. "Some Welfare Effects of Sequential Customs Union Formation," Canadian Journal of Economics, Canadian Economics Association, vol. 29(4), pages 941-958, November.
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    Cited by:

    1. Souleymane COULIBALY, 2006. "Evaluating the Trade and Welfare Effects of Developing RTAs," Cahiers de Recherches Economiques du Département d'économie 06.03, Université de Lausanne, Faculté des HEC, Département d’économie.
    2. Baldwin, Richard, 2008. "Big-Think Regionalism: a Critical Survey," CEPR Discussion Papers 6874, C.E.P.R. Discussion Papers.
    3. Anna Maria Mayda & Chad Steinberg, 2009. "Do South‐South trade agreements increase trade? Commodity‐level evidence from COMESA," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 42(4), pages 1361-1389, November.
    4. Anna Maria Mayda & Chad Steinberg, 2009. "Do South-South trade agreements increase trade? Commodity-level evidence from COMESA," Canadian Journal of Economics, Canadian Economics Association, vol. 42(4), pages 1361-1389, November.
    5. Arvind Panagariya, 1999. "The Regionalism Debate: An Overview," The World Economy, Wiley Blackwell, vol. 22(4), pages 455-476, June.
    6. Winters, L. Alan, 1996. "Regionalism versus multilateralism," Policy Research Working Paper Series 1687, The World Bank.
    7. Panagariya, A., 1997. "Preferential trading and the myth of natural trading partners," Japan and the World Economy, Elsevier, vol. 9(4), pages 471-489, December.
    8. Céline Carrere, 2011. "Regional Agreements and Welfare in the South: When Scale Economies in Transport Matter," CERDI Working papers halshs-00556992, HAL.
    9. Frankel, Jeffrey A & Stein, Ernesto & Wei, Shang-Jin, 1996. "Regional Trading Arrangements: Natural or Supernatural," American Economic Review, American Economic Association, vol. 86(2), pages 52-56, May.
    10. Lev Freinkman & Evgeny Polyakov & Carolina Revenco, 2004. "Trade Performance and Regional Integration of the CIS Countries," World Bank Publications - Books, The World Bank Group, number 14933, December.
    11. Alexandre Skiba, 2007. "Regional Economies of Scale in Transportation and Regional Welfare," WORKING PAPERS SERIES IN THEORETICAL AND APPLIED ECONOMICS 200705, University of Kansas, Department of Economics, revised Sep 2007.
    12. Anna Maria Mayda & Mr. Chad Steinberg, 2007. "Do South-South Trade Agreements Increase Trade? Commodity-Level Evidence from COMESA," IMF Working Papers 2007/040, International Monetary Fund.
    13. Miljkovic, Dragan & Paul, Rodney, 2003. "Agricultural trade in North America: Trade creation, regionalism and regionalisation," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 47(3), pages 1-18, September.
    14. Baier, Scott L. & Bergstrand, Jeffrey H., 2004. "Economic determinants of free trade agreements," Journal of International Economics, Elsevier, vol. 64(1), pages 29-63, October.
    15. Arvind Panagariya, 1998. "Do transport costs justifyregional preferential trading arrangements? no," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 134(2), pages 280-301, June.

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    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration

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