What question did this study set out to answer?

To systematically develop the static theory of preferential trade areas and evaluate modern theoretical developments concerning external tariffs, global welfare, and multilateral trade liberalization.

June 1, 2000Journal of Economic Literature

Preferential Trade Liberalization: The Traditional Theory and New Developments

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To systematically develop the static theory of preferential trade areas and evaluate modern theoretical developments concerning external tariffs, global welfare, and multilateral trade liberalization.
Formulation and analysis of static trade models evaluating initial trade volumes and geographic proximity.
Theoretical synthesis of modern literature on multi-bloc division, endogenous external tariff formation, dynamic time-paths, and empirical evaluation methods.
Neither large initial volumes of intra-union trade nor geographic proximity reliably predict welfare gains from preferential trade areas.
The formation of preferential agreements fundamentally shifts external tariff incentives and determines whether regional agreements serve as building blocks or stumbling blocks to multilateral trade.

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Implication

Theoretical review demonstrates limitations of traditional criteria for preferential trade areas, highlighting complex dynamic impacts on global multilateral trade liberalization.

Cite This Study

Arvind Panagariya (2000) studied this question.

synapsesocial.com/papers/6a1018538090e499da609c0b https://doi.org/10.1257/jel.38.2.287

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Implication

Theoretical review demonstrates limitations of traditional criteria for preferential trade areas, highlighting complex dynamic impacts on global multilateral trade liberalization.

Preferential Trade Liberalization: The Traditional Theory and New Developments

Key Points

Discussion

Implication

Cite This Study

Preferential Trade Liberalization: The Traditional Theory and New Developments

Key Points

Discussion

Implication

Cite This Study

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