Winners and Losers in International Economic Integration: The Distributional Effects of the NAFTA

ASEAN - Canada Forum 2008. - Singapore : ISEAS Publ., ISBN 978-981-427914-7. - 2010, p. 158-194

26 Pages Posted: 9 Jan 2010 Last revised: 9 Aug 2016

See all articles by Dan Ciuriak

Dan Ciuriak

Ciuriak Consulting Inc.; C.D. Howe Institute; Centre for International Governance Innovation (CIGI); BKP Development Research & Consulting GmbH; Asia Pacific Foundation of Canada

Date Written: 2010

Abstract

While trade liberalization is, in theory and for the most part in practice, a win-win proposition at the national level, when one drills down to the industry level, and further to the firm and household level, it becomes evident that the distribution of costs and benefits is almost inevitably uneven. This paper addresses some of the distributional issues raised by the North American Free Trade Agreement (NAFTA), including the balance between short-run adjustment pains and long-run productivity gains and the implications for incidence of costs and benefits across generations. Focusing on Canada, it finds that, while Canada emerged from the trade liberalization experience as a stronger and more competitive economy, the hoped-for strengthening of long-run productivity growth was disappointingly small (productivity growth remains an issue in Canada today) and the adjustment period and associated distributional costs were large. The paper concludes by drawing possible lessons from the NAFTA experience for other economies entering into international integration agreements.

Keywords: F14, F15

JEL Classification: NAFTA, distributional effects, trade agreement, adjustment costs, inter-generational transfers

Suggested Citation

Ciuriak, Dan, Winners and Losers in International Economic Integration: The Distributional Effects of the NAFTA (2010). ASEAN - Canada Forum 2008. - Singapore : ISEAS Publ., ISBN 978-981-427914-7. - 2010, p. 158-194. Available at SSRN: https://ssrn.com/abstract=1532881 or http://dx.doi.org/10.2139/ssrn.1532881

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