Professional Documents
Culture Documents
Chap 13
Chap 13
Chap 13
Part I
Policy
Classical
2. Opportunity costs
3. Comparative advantage
Economic
geography
International
business
Growth theory
New trade
9. Imperfect competition
10. Intra-industry trade
New interactions
14. Geographical economics
15. Multinationals
16. New goods, growth, and
development
Part II
8. Trade policy
Part III
Industrial
organization
Neo-classical
4. Production structure
5. Factor prices
6. Production volume
7. Factor abundance
Part IV
Introduction
Objectives / key terms
Preferential trade agreement
Trade-creation / trade-diversion
Regionalism / multilateralism
EU enlargement
demand
Trade creation
pC+t
pB+t
tariff
tariff
pC
pB
q1
q3
q4
quantity
demand
supply
Trade diversion
pB+t
tariff
pC+t
tariff
pB
pC
q1
q3
q4
quantity
COMESA
countries
Egypt
Sudan
Ethiopia
Uganda Kenya
Zaire
Angola
Zambia
Namibia
Zimbabwe
Madagascar
Myanmar
Viet Nam
Lao PDR
Thailand
Philippines
Cambodia
Malaysia
Malaysia
Indonesia
Indonesia
Indonesia
Indonesia
Regional trade
agreements
Canada
United States
Mexico
Venezuela
Colombia
Peru
Brazil
RTAs in America
NAFTA
CARICOM
CACM
ANDEAN
MERCOSUR
(3)
(13)
(5)
(5)
(4)
Bolivia
Argentina
t = 0.3
0.95
t = 0.5
0.9
t = 0.7
0.85
0
10
15
20
ECSC
EURATOM
1957
EEC
1967
EC
1973
1981
Membership + Greece
1986
1990
1993
EU
1995
1999
EMU
European Union
Economic and Monetary Union
RTAs in Europe
EU
(15)
EFTA
(3)
CEFTA (7)
iceland
finland
sweden
Green circle:
norway
estonia
$
$
$
former EFTA
latvia
lithuania
denmark
ireland
united kingdom
Red star:
poland
netherlands
germany
belgium
potential EU member
czech republic
france
switzerland
austria
romania
$E
portugal
slovakia
hungary
slovenia
E
italy
$
$
E
bulgaria
spain
greece
malta
turkey
a. population (m illions)
germany
turkey
turkey
france
united kingdom
spain
france
sweden
italy
germany
spain
finland
poland
poland
romania
italy
netherlands
united kingdom
greece
romania
20
40
60
80
200
400
600
800
d. GDP/cap (PPS)
germany
luxembourg
united kingdom
denmark
france
netherlands
italy
ireland
spain
belgium
turkey
austria
netherlands
germany
poland
finland
belgium
united kingdom
sweden
sweden
500
1000
1500 2000
20,000
40,000
Conclusions
There are many regional trade agreements (RTAs) in the world.
We also distinguish FTAs, customs union, common market,
economic union.
RTAs in general increase welfare through trade creation, but the
discriminatory nature of an RTA may make the net welfare effect
negative.
Increased popularity of Regionalism rather than Multilateralism
may be bad for the world economy.
EU is most succesful and powerful economic integration scheme;
many CEE countries want to join; EUs political decision process
needs to be revised.