Trade liberalisation and regional integration: the search for large numbers

We surveyed the empirical literature using multi-country computable general equilibrium (CGE) models to analyse potential and actual regional trade agreements (RTAs). The studies indicate that these RTAs improve welfare, that trade creation greatly exceeds trade diversion, and that they are consistent with further global liberalisation. The welfare gains are bigger when models incorporate aspects of ‘‘new trade theory’’ such as increasing returns, imperfect competition, and links between trade liberalisation, total factor productivity growth, and capital accumulation. We also conjectured that an RTA expands market size and stability, allowing firms to pursue economies of fine specialisation, generating additional ‘‘Smithian’’ efficiency gains.


Issue Date:
2002
Publication Type:
Journal Article
DOI and Other Identifiers:
Record Identifier:
https://ageconsearch.umn.edu/record/118597
PURL Identifier:
http://purl.umn.edu/118597
Published in:
Australian Journal of Agricultural and Resource Economics, 46, 4
Page range:
585-604
Total Pages:
20




 Record created 2017-04-01, last modified 2020-10-28

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