Formation of Regional Trade Blocs
WHY DO BLOCS TRADE ? [Paper 1]
The basic question we try to address in this paper is whether regional trade agreements affect multilateral trade liberalization i.e, whether Minilateralism and Multilaterism are friends of foes. We also try to find out the various reasons responsible for the formation of Regional Trade Blocs and Free Trade Agreements.
MINILATERALISM vs MULTILATERALISM
There are two usual ways in which the respective governments might approach this. In the first scenario, governments form a multilateral arrangement that evolves in a liberal direction over time. In the second, governments form a minilateral arrangement that becomes multilateral through sequential admission of new members. They show that the minilateral-to-multilateral route leads to deeper cooperation than the purely multilateral one because, in the latter scenario, conservative members can slow the evolution of the regime. We mainly address two areas here i.e, 1) how do FTAs affect trade and 2) the effect on Free Trade Agreements[FTA] on multilateral liberalization.
Three claims are usually …show more content…
There are altogether C continents with N countries on each. On any continent, all countries (spokes) are of the same distance from the centre (hub) of the continent. Trade must go through the hub. To ship a good between countries on different continents, one has to travel from the exporting country to its continent 's hub, then to the hub of importing continent, before reaching the importing country Transportation cost is modelled by an "iceberg" assumption. With one unit of a good leaving the exporting country, 1-α unit arrives in the importing country on the same continent, and (1-α)(l- β) unit arrives in the importing country on a different continent. "α" and "β" can be interpreted as intra- and inter-continental transport costs,
WHY DO BLOCS TRADE ? [Paper 1]
The basic question we try to address in this paper is whether regional trade agreements affect multilateral trade liberalization i.e, whether Minilateralism and Multilaterism are friends of foes. We also try to find out the various reasons responsible for the formation of Regional Trade Blocs and Free Trade Agreements.
MINILATERALISM vs MULTILATERALISM
There are two usual ways in which the respective governments might approach this. In the first scenario, governments form a multilateral arrangement that evolves in a liberal direction over time. In the second, governments form a minilateral arrangement that becomes multilateral through sequential admission of new members. They show that the minilateral-to-multilateral route leads to deeper cooperation than the purely multilateral one because, in the latter scenario, conservative members can slow the evolution of the regime. We mainly address two areas here i.e, 1) how do FTAs affect trade and 2) the effect on Free Trade Agreements[FTA] on multilateral liberalization.
Three claims are usually …show more content…
There are altogether C continents with N countries on each. On any continent, all countries (spokes) are of the same distance from the centre (hub) of the continent. Trade must go through the hub. To ship a good between countries on different continents, one has to travel from the exporting country to its continent 's hub, then to the hub of importing continent, before reaching the importing country Transportation cost is modelled by an "iceberg" assumption. With one unit of a good leaving the exporting country, 1-α unit arrives in the importing country on the same continent, and (1-α)(l- β) unit arrives in the importing country on a different continent. "α" and "β" can be interpreted as intra- and inter-continental transport costs,