Preference Areas and Intra Product Specialization

Sven Arndt ()
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Sven Arndt: Lowe Institute of Political Economy, Claremont McKenna College

No 101, Working Papers from Lowe Institute of Political Economy

Abstract: It is well-known that preferential trade agreements involving final products may raise or lower welfare, depending upon whether the trade-creating elements dominate or not. The object of this paper is to examine the effects of preference arrangements covering trade in goods as well as components and allowing for the liberalization of foreign direct investment. It is shown that component specialization raises wages in both the importing and exporting country. It also raises industry output and employment in both countries. This finding is at odds with the predictions of critics of NAFTA.

Keywords: production networks; regional integration; globalization (search for similar items in EconPapers)
JEL-codes: F11 F15 F23 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2001
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Published in Globalization and Political Economy of Trade Policy (APF Press 2001), pages 237-249.

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Persistent link: https://EconPapers.repec.org/RePEc:loi:wpaper:0101

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