Trade liberalization by less developed countries with a large market size: meager welfare gains?

Adolfo Cristobal Campoamor ()
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Adolfo Cristobal Campoamor: Universidad Loyola Andalucia
Authors registered in the RePEc Author Service: Adolfo Cristobal-Campoamor

Economics Bulletin, 2019, vol. 39, issue 2, 1309-1317

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.

Keywords: International Trade; North-South Inequality; Welfare Analysis (search for similar items in EconPapers)
JEL-codes: F1 I3 (search for similar items in EconPapers)
Date: 2019-05-31
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Persistent link: https://EconPapers.repec.org/RePEc:ebl:ecbull:eb-19-00065

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