Document Type

Book Chapter

Department

Economics (CMC)

Publication Date

2002

Abstract

Preferential trade agreements between dissimilar economies are known to encourage inter-industry specialization, but when they take place between developed and developing countries, they also change the nature of intra-industry trade by facilitating cross-border production sharing. When such arrangements liberalize foreign direct investment as well as trade, production is internationalized and component or intra-product trade increases. Using a standard trade model, this paper derives the conditions under which integration of this type improves competitiveness and raises employment, output, and welfare.

Comments

First published in Globalization and Economic Growth: A Critical Evaluation.

Rights Information

© 2002 Athenian Policy Forum Press

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