Growth, Globalization, and Gains from the Uruguay Round

40 Pages Posted: 20 Apr 2016

See all articles by Thomas W. Hertel

Thomas W. Hertel

Purdue University - Center for Global Trade Analysis; Center for Robust Decisionmaking on Climate & Energy Policy (RDCEP)

Will J. Martin

International Food Policy Research Institute (IFPRI)

Betina Dimaranan

International Food Policy Research Institute; Purdue University - Department of Agricultural Economics

Christian Friis Bach

University of Copenhagen - Department of Economics

Date Written: June 1996

Abstract

Emphasizing the importance of evaluating the Uruguay Round in the context of a changing world economy, the authors base their projections on a model that incorporates certain economic shifts: 1) that the center of economic gravity will shift toward the South and toward Asia (a shift that is already under way and shows no signs of abating), and 2) that the pattern of comparative advantage will continue to change, with the East Asian economies gaining comparative advantage in the production of physical and human-capital-intensive products. The authors argue that these changes in the global economy significantly affect their analysis of the Uruguay round reforms, for two reasons. First, with the global distribution of trade and production shifting toward Asia, the deeper Uruguay Round cuts in that region become more important, giving rise to a 17 percent increase in the proportionate welfare gain after implementation of tariff cuts. Second, without the Round, almost all of the bilateral quotas associated with the Multifibre Arrangement (MFA) would have become more binding and the resulting distortion would have been significantly greater. In this analysis, the global gain from MFA reform is 60 percent greater than it would have been without taking into account the effects of growth. Of course, procedures for implementation of the MFA reforms are more complex than they have conveyed for purposes of analysis. In practice, one must also consider the impact of accel quota growth under the Agreement on Textiles and Clothing. But even when the Agreement on Textiles and Clothing is implemented over the period for which projections were made, quota rents rise for many bilateral flows. This is a consequence both of shifts in comparative advantage toward the supplying countries and of simultaneous cuts in tariffs on textiles and clothing. The projections approach used here may be viewed as a logical extension of the growing econometric literature seeking to explain the determinants of economic growth through regression analysis. By offering a bridge between econometric evidence and computable general equilibrium modeling, the authors hope to combine the two approaches to help shed light on the interaction between trade reform and economic growth.

Suggested Citation

Hertel, Thomas W. and Martin, William J. and Dimaranan, Betina and Bach, Christian Friis, Growth, Globalization, and Gains from the Uruguay Round (June 1996). Available at SSRN: https://ssrn.com/abstract=636125

Thomas W. Hertel (Contact Author)

Purdue University - Center for Global Trade Analysis ( email )

Department of Agricultural Economics
1145 Krannert Building
West Lafayette, IN 47907-1145
United States
765-494-4199 (Phone)
765-494-9176 (Fax)

Center for Robust Decisionmaking on Climate & Energy Policy (RDCEP) ( email )

5735 S. Ellis Street
Chicago, IL 60637
United States

William J. Martin

International Food Policy Research Institute (IFPRI) ( email )

1201 Eye St, NW,
Washington, DC 20005
United States

Betina Dimaranan

International Food Policy Research Institute ( email )

2033 K Street NW
Washington, DC 20006
United States
(202) 862-8155 (Phone)
(202) 467-4439 (Fax)

Purdue University - Department of Agricultural Economics ( email )

West Lafayette, IN 47907-1145
United States
(765) 494-4318 (Phone)

Christian Friis Bach

University of Copenhagen - Department of Economics ( email )

Øster Farimagsgade 5
Bygning 26
1353 Copenhagen K.
Denmark
(45) 35 32 44 01 (Phone)
(45) 35 32 30 85 (Fax)

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
123
Abstract Views
1,688
Rank
412,003
PlumX Metrics