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Globalization’s Bystanders: Does Trade Liberalization Hurt Countries that Do Not Participate?

Author

Listed:
  • Alan V. Deardorff

    (University of Michigan)

  • Robert M. Stern

    (University of Michigan)

Abstract

This paper uses trade theory to examine the effects of trade liberalization on countries that do not participate in it. These include both countries that fail to participate in multilateral trade negotiations, and also countries that lie outside of preferential trading arrangements such as free trade areas. The analysis suggests that, while it is theoretically possible for excluded countries to gain, through improved terms of trade, from trade liberalization, several reasons suggest that they are more likely to lose.

Suggested Citation

  • Alan V. Deardorff & Robert M. Stern, 2005. "Globalization’s Bystanders: Does Trade Liberalization Hurt Countries that Do Not Participate?," Working Papers 529, Research Seminar in International Economics, University of Michigan.
    • Handle: RePEc:mie:wpaper:529
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    File URL: http://fordschool.umich.edu/rsie/workingpapers/Papers526-550/r529.pdf
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    References listed on IDEAS

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    1. Brown, Drusilla K. & Kiyota, Kozo & Stern, Robert M., 2005. "Computational analysis of the Free Trade Area of the Americas (FTAA)," The North American Journal of Economics and Finance, Elsevier, vol. 16(2), pages 153-185, August.
    2. Won Chang & L. Alan Winters, 2015. "How Regional Blocs Affect Excluded Countries: The Price Effects of MERCOSUR," World Scientific Book Chapters, in: Non-Tariff Barriers, Regionalism and Poverty Essays in Applied International Trade Analysis, chapter 11, pages 199-214, World Scientific Publishing Co. Pte. Ltd..
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    6. Panagariya, Arvind & Krishna, Pravin, 2002. "On necessarily welfare-enhancing free trade areas," Journal of International Economics, Elsevier, vol. 57(2), pages 353-367, August.
    7. Martin Richardson, 2017. "Tariff Revenue Competition in a Free Trade Area," World Scientific Book Chapters, in: Dimensions of Trade Policy, chapter 8, pages 171-181, World Scientific Publishing Co. Pte. Ltd..
    8. Mayer, Wolfgang, 1984. "Endogenous Tariff Formation," American Economic Review, American Economic Association, vol. 74(5), pages 970-985, December.
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    Cited by:

    1. Patrick Minford & Sakshi Gupta & Vo P.M. Le & Vidya Mahambare & Yongdeng Xu, 2015. "Should Britain Leave the EU?," Books, Edward Elgar Publishing, number 16679.
    2. Costantini, Valeria & Liberati, Paolo, 2014. "Technology transfer, institutions and development," Technological Forecasting and Social Change, Elsevier, vol. 88(C), pages 26-48.
    3. Mikic, Mia, 2007. "Preferential trade agreements and agricultural trade liberalization in Asia and the Pacific," MPRA Paper 2947, University Library of Munich, Germany.
    4. Chris Milner, 2006. "Making NAMA Work: Supporting Adjustment and Development," The World Economy, Wiley Blackwell, vol. 29(10), pages 1409-1422, October.
    5. Bojnec, Stefan & Ferto, Imre, 2009. "Agro-food trade competitiveness of Central European and Balkan countries," Food Policy, Elsevier, vol. 34(5), pages 417-425, October.

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    More about this item

    Keywords

    Trade liberalization; Globalization;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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