Trade regimes and Gatt: resource intensive vs. knowledge intensive growth, Chapter 10
Trading blocks can help or hinder the liberalization of world trade. A determining factor is whether trade within the block is organized around traditional comparative advantages, or around economies of scale. Regional free trade agreements such as NAFTA can be a substitutes for global free trade when they are based on traditional comparative advantages; then each regional market develops market power and incentives to impose tariffs on the rest of the world. Alternatively, regional trade agreements can be complementary to global free trade. This occurs when the blocks are organized around the exploitation of economies of scale and based on knowledge-intensive sectors. I establish that external economies of scale produce incentives for expanded trade; they can defeat the standard arguments for "optimal tariffs" and mitigate another negative feature of trading blocks: their tendency to divert trade from efficient to inefficient sources. The emergence of regional blocks organized around economies of scale can therefore lead to increasingly open international markets. I discuss policy implications for the EU and for free trade in the Americas.
|Date of creation:||1996|
|Date of revision:|
|Publication status:||Published in Handbook on Globalization of the World Economy (1998): pp. 226-249|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
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.:
- Chichilnisky, Graciela, 1993.
"North-South trade and the dynamics of renewable resources,"
Structural Change and Economic Dynamics,
Elsevier, vol. 4(2), pages 219-248, December.
- Chichilnisky, G., 1993. "North-South Trade and the Dynamics of Renewable Resources," Papers 93-15, Columbia - Graduate School of Business.
- Lloyd A. Metzler, 1949. "Tariffs, the Terms of Trade, and the Distribution of National Income," Journal of Political Economy, University of Chicago Press, vol. 57, pages 1.
- Riezman, Raymond, 1985.
"Customs unions and the core,"
Journal of International Economics,
Elsevier, vol. 19(3-4), pages 355-365, November.
- Chichilnisky,Graciela & Heal,Geoffrey M., 1987.
"The Evolving International Economy,"
Cambridge University Press, number 9780521267168, November.
- Chichilnisky, Graciela, 1995.
"Strategies for trade liberalization in the Americas,"
8393, University Library of Munich, Germany.
- Chichilnisky, Graciela, 1992. "Strategies for trade liberalization in the Americas," Sede de la CEPAL en Santiago (Estudios e Investigaciones) 33919, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
- Chichilnisky, Graciela, 1986. "A general equilibrium theory of North-South trade," MPRA Paper 8810, University Library of Munich, Germany.
- Chichilnisky, Graciela, 1981. "Terms of trade and domestic distribution : Export-led growth with abundant labour," Journal of Development Economics, Elsevier, vol. 8(2), pages 163-192, April.
- Chichilnisky, Graciela, 1994. "North-South Trade and the Global Environment," American Economic Review, American Economic Association, vol. 84(4), pages 851-74, September.
- John Kennan & Raymond Riezman, 1990.
"Optimal Tariff Equilibria with Customs Unions,"
Canadian Journal of Economics,
Canadian Economics Association, vol. 23(1), pages 70-83, February.
- John Kennan & Raymond Riezman, 2013.
"Do Big Countries Win Tariff Wars?,"
World Scientific Book Chapters,
in: International Trade Agreements and Political Economy, chapter 4, pages 45-51
World Scientific Publishing Co. Pte. Ltd..
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:8813. 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: (Joachim Winter)
If references are entirely missing, you can add them using this form.