Language:
English
Pages:
Online-Ressource (1 online resource (36 p.))
Edition:
Online-Ausg. World Bank E-Library Archive
Parallel Title:
Venables, Anthony Regional Integration Agreements
Keywords:
Agriculture
;
Comparative Advantage
;
Consumers
;
Country Strategy and Performance
;
Development Economics
;
Economic Integration
;
Economic Performance
;
Economic Theory and Research
;
Emerging Markets
;
Finance and Financial Sector Development
;
Financial Literacy
;
Free Trade
;
Free Trade
;
Human Capital
;
Income
;
Income
;
Income Levels
;
Inequality
;
International Economics & Trade
;
Law and Development
;
Macroeconomics and Economic Growth
;
Outcomes
;
Per Capita Income
;
Per Capita Incomes
;
Poverty Reduction
;
Private Sector Development
;
Production
;
Public Sector Development
;
Real Income
;
Social Protections and Labor
;
Theory
;
Trade Diversion
;
Trade Law
;
Trade Policy
;
Trade and Regional Integration
;
Value
;
Value Added
;
Welfare
;
Agriculture
;
Comparative Advantage
;
Consumers
;
Country Strategy and Performance
;
Development Economics
;
Economic Integration
;
Economic Performance
;
Economic Theory and Research
;
Emerging Markets
;
Finance and Financial Sector Development
;
Financial Literacy
;
Free Trade
;
Free Trade
;
Human Capital
;
Income
;
Income
;
Income Levels
;
Inequality
;
International Economics & Trade
;
Law and Development
;
Macroeconomics and Economic Growth
;
Outcomes
;
Per Capita Income
;
Per Capita Incomes
;
Poverty Reduction
;
Private Sector Development
;
Production
;
Public Sector Development
;
Real Income
;
Social Protections and Labor
;
Theory
;
Trade Diversion
;
Trade Law
;
Trade Policy
;
Trade and Regional Integration
;
Value
;
Value Added
;
Welfare
Abstract:
December 1999 - Developing countries may be better served by north-south than by south-south free trade agreements. Free trade agreements between low-income countries tend to lead to divergence in member country incomes, while agreements between high-income countries tend to lead to convergence. Venables examines how benefits - and costs - of a free trade area are divided among member countries. Outcomes depend on the member countries' comparative advantage, relative to one another and to the rest of the world. Venables finds that free trade agreements between low-income countries tend to lead to divergence in member country incomes, while agreements between high-income countries tend to lead to convergence. Changes induced by comparative advantage may be amplified by the effects of agglomeration. The results suggest that developing countries may be better served by north-south than by south-south free trade agreements, because north-south agreements increase their prospects for convergence with high-income members of the free trade area. In north-south free trade agreements, additional forces are likely to operate. The agreement may be used, for example, as a commitment mechanism to lock in economic reforms (as happened in Mexico with the North American Free Trade Agreement and in Eastern European countries with the European Union). A free trade agreement may also - through its effect on trade and through foreign direct investment - promote technology transfer to lower-income members. This paper - a product of Trade, Development Research Group - is part of a larger effort in the group to study the effects of regional integration. The author may be contacted at avenablesworldbank.org
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