IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Traditional comparative advantage vs. increasing returns to scale: NAFTA and the GATT

  • Chichilnisky, Graciela

Regional free trade zones have been unexpectedly successful in the last decade. Since 1980 the European Community enlarged significantly its membership and its scope. It now includes southern European countries, and market-integrating features allowing goods, people, services and capital to flow freely around an area accounting for about one fourth of world economic output. Based on economies of scale - we find a condition that determine whether trading blocks Such as NAFTA and the EU are complementary with and encourage global free trade - when this condition fails, instead, trading blocks undermine free trade. It is the purpose of this paper to re-examine the positive and negative aspects of trading blocs as they relate to gains from free trade. The paper is primarily a discussion of conceptual issues, although it is based on facts and on particular cases which are of interest to the trade liberalization in the Americas. We take a somewhat different approach to a familiar issue. Rather than asking the standard question of whether regional blocs help or hinder global free trade, we ask a more detailed question: what type of customs union is likely to lead to a trade war between the blocs, and what type of customs union is, instead, likely to lead to expanded global trade. In practical terms: what type of trade policies within the blocs will provide economic incentives for expanding free trade. We shall compare the impact on the world economy of free trade blocs which are organized around two alternative principles: one is traditional comparative advantages, the other is economies of scale. The aim is to determine how the patterns of trade inside the blocs determine the trade relations among the blocs.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://mpra.ub.uni-muenchen.de/8360/1/MPRA_paper_8360.pdf
File Function: original version
Download Restriction: no

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 8360.

as
in new window

Length:
Date of creation: 1994
Date of revision:
Handle: RePEc:pra:mprapa:8360
Contact details of provider: Postal: Schackstr. 4, D-80539 Munich, Germany
Phone: +49-(0)89-2180-2219
Fax: +49-(0)89-2180-3900
Web page: http://mpra.ub.uni-muenchen.de

More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Chichilnisky, G., 1993. "North-South Trade and the Dynamics of Renewable Resources," Papers 93-15, Columbia - Graduate School of Business.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:8360. 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: (Ekkehart Schlicht)

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 references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link 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 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.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.