TY  - BOOK
AU  - Venables,Anthony
AU  - Venables,Anthony
TI  - Regional Integration Agreements: A Force for Convergence or Divergence? 
PY  - 1999///
CY  - Washington, D.C.
PB  - The World Bank
KW  - Agriculture
KW  - Comparative Advantage
KW  - Consumers
KW  - Country Strategy and Performance
KW  - Development Economics
KW  - Economic Integration
KW  - Economic Performance
KW  - Economic Theory and Research
KW  - Emerging Markets
KW  - Finance and Financial Sector Development
KW  - Financial Literacy
KW  - Free Trade
KW  - Human Capital
KW  - Income
KW  - Income Levels
KW  - Inequality
KW  - International Economics & Trade
KW  - Law and Development
KW  - Macroeconomics and Economic Growth
KW  - Outcomes
KW  - Per Capita Income
KW  - Per Capita Incomes
KW  - Poverty Reduction
KW  - Private Sector Development
KW  - Production
KW  - Public Sector Development
KW  - Real Income
KW  - Social Protections and Labor
KW  - Theory
KW  - Trade and Regional Integration
KW  - Trade Diversion
KW  - Trade Law
KW  - Trade Policy
KW  - Value
KW  - Value Added
KW  - Welfare
N2  - December 1999 - Developing countries may be better served by north-south than by south-south free trade agreements. Free trade agreements between low-income countries tend to lead to divergence in member country incomes, while agreements between high-income countries tend to lead to convergence. Venables examines how benefits - and costs - of a free trade area are divided among member countries. Outcomes depend on the member countries' comparative advantage, relative to one another and to the rest of the world. Venables finds that free trade agreements between low-income countries tend to lead to divergence in member country incomes, while agreements between high-income countries tend to lead to convergence. Changes induced by comparative advantage may be amplified by the effects of agglomeration. The results suggest that developing countries may be better served by north-south than by south-south free trade agreements, because north-south agreements increase their prospects for convergence with high-income members of the free trade area. In north-south free trade agreements, additional forces are likely to operate. The agreement may be used, for example, as a commitment mechanism to lock in economic reforms (as happened in Mexico with the North American Free Trade Agreement and in Eastern European countries with the European Union). A free trade agreement may also - through its effect on trade and through foreign direct investment - promote technology transfer to lower-income members. This paper - a product of Trade, Development Research Group - is part of a larger effort in the group to study the effects of regional integration. The author may be contacted at avenables@worldbank.org
UR  - http://elibrary.worldbank.org/doi/book/10.1596/1813-9450-2260
ER  -