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Multilateral trade liberalization and political disintegration - implications for the evolution of free trade areas and customs unions, Volume 1
 
Author:Schiff, Maurice; Collection Title:Policy, Research working paper ; no. WPS 2350
Date Stored:2001/04/25Document Date:2000/05/31
Document Type:Policy Research Working PaperSubTopics:Environmental Economics & Policies; Rules of Origin; Earth Sciences & GIS; Economic Theory & Research; Trade Policy; Free Trade; Trade and Regional Integration
Language:EnglishMajor Sector:(Historic)Economic Policy
Report Number:WPS2350Sub Sectors:Trade
Volume No:1  

Summary: The author combines two theories - one about how multilateral trade liberalization affects regional integration, the other about how it affects political disintegration - to explain why the ratio of free trade areas to customs unions has increased over time. Ethier argues (1998, 1999) that multilateral trade liberalization led to the recent wave of regional integration arrangements. Alesina and others (1997), in discussing the number and size of countries, argue that multilateral trade liberalization leads to political disintegration, with an increase in the number of countries. Combining the two arguments, the author hypothesizes that as multilateral trade liberalization proceeds, and the number of regional integration arrangements increases, the ratio of free trade areas to customs unions also increases. The data, which show that ratio increasing in the 1990s, are consistent with the hypothesis.

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