Title Trade liberalization by less developed countries with a large market size: meager welfare gains?
Authors CRISTOBAL CAMPOAMOR , ADOLFO, CRISTOBAL CAMPOAMOR , ADOLFO
External publication No
Means Econ. Bull.
Scope Article
Nature Científica
SJR Quartile 3
Area International
Publication date 01/01/2019
ISI 000504882300051
Abstract In this paper we present a one-sector Dixit-Stiglitz-Krugman model of North-South trade, in order to evaluate the welfare and convergence implications of a gradual, bilateral trade liberalization. Using the same formal setting that generated the "new trade theory" wave, we show that a poorer and technologically disadvantaged South may diverge in welfare terms with the North, provided that its population and market size were large enough. Both regional blocks are shown to benefit from freer trade in absolute terms.
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