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  4. June 2000
  5. Preferential Trade Liberalization: The Traditional Theory and New Developments

Journal of Economic Literature

ISSN 0022-0515 (Print) | ISSN 2328-8175 (Online)

Preferential Trade Liberalization: The Traditional Theory and New Developments

  • Arvind Panagariya
Journal of Economic Literature
vol. 38, no. 2, June 2000
(pp. 287–331)
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Abstract

This paper begins by systematically developing the "static" theory of preferential trade areas (PTAs) and showing that neither a large volume of initial intra-union trade nor geographical proximity can serve as a guide to welfare enhancing PTAs. The paper then discusses the modern literature addressing welfare effects of simultaneous division of the world into many PTAs, the impact of the decision to form a PTA on external tariffs and the "dynamic" time-path question of whether PTAs are building blocks or stumbling blocks towards multilateral freeing of trade. A final section discusses key theoretical considerations in the empirical evaluation of PTAs.

Citation

Panagariya, Arvind. 2000. "Preferential Trade Liberalization: The Traditional Theory and New Developments." Journal of Economic Literature, 38 (2): 287–331. DOI: 10.1257/jel.38.2.287

JEL Classification

  • F13 Trade Policy; International Trade Organizations