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Regionalism or Multilateralism? A Political Economy Choice
Author:
Ms. Giorgia Albertin
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Series:
IMF Working Papers
Volume/Issue:
Volume 2008: Issue 065
Language:
English
Publication Date:
01 Mar 2008
DOI:
https://doi.org/10.5089/9781451869279.001
ISBN:
9781451869279
ISSN:
1018-5941
Pages:
26
Keywords:
WP; free trade; interest group
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper provides a political economy analysis of the incentives underpinning a country's decision to enter a regional trade agreement when a multilateral free trade agreement is available, and of how entering a regional trade agreement affects the incentives to pursue multilateral trade liberalization. Taking into account the influence exerted by organized interest groups in the formation of trade agreements, we derive a formal condition under which a regional trade agreement is preferred to a multilateral one. Furthermore, we show that a country's decision to enter a regional trade agreement unambiguously undermines the incentives towards multilateral trade liberalization.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 2008: Issue 065