North–South Trade Liberalization and Economic Welfare
John Gilbert,
Hamid Beladi and
Reza Oladi
Review of Development Economics, 2015, vol. 19, issue 4, 1006-1017
Abstract:
We consider a general equilibrium model of a developing economy (the South) that opens to trade with a developed economy (the North). The southern economy is characterized by open urban unemployment and rural–urban migration, a competitive agricultural sector and a monopolistically competitive manufacturing sector. Hence, there is potential for both inter- and intra-industry trade to arise on liberalization, in addition to distortionary effects of duality. Southern comparative advantage in agriculture may arise from the labor market distortion and the basis for intra-industry trade is love for variety. We characterize various configurations of the trade pattern, and the resulting welfare consequences of opening to trade in this context. We illustrate a new mechanism under which in some circumstances it may be possible for trade liberalization to lower economic welfare in the South.
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)
Downloads: (external link)
http://hdl.handle.net/10.1111/rode.12182 (text/html)
Access to full text is restricted to subscribers.
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:bla:rdevec:v:19:y:2015:i:4:p:1006-1017
Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1363-6669
Access Statistics for this article
Review of Development Economics is currently edited by E. Kwan Choi
More articles in Review of Development Economics from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().