Economics and Political Economy of Regional Trade Agreements

This paper provides a literature review of selected aspects of economics and political economy of regional trade agreements. From a static perspective regional trade agreements have ambiguous effects on the welfare. Assumption of welfare maximization cannot explain the proliferation of regional trade agreements as it cannot explain extensive use of trade barriers. New political economy approach endogenizes trade policy as well as decisions to form a regional trade agreement. According to major models of political economy, regional trade agreements are likely to be formed when they secure higher protection and trade diversion. Furthermore the literature mostly concludes that integration affects external tariffs.


Issue Date:
2007
Publication Type:
Working or Discussion Paper
PURL Identifier:
http://purl.umn.edu/7286
Total Pages:
33
Series Statement:
TRADEAG Working Papers
5/2007




 Record created 2017-04-01, last modified 2017-08-23

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