Regionalism: Old and New, Theory and Practice

AGRICULTURAL POLICY REFORM AND THE WTO: WHERE ARE WE HEADING?, Giovanni Anania, Mary E. Bohman, Colin A. Carter, Alex F. McCalla, eds., Northampton, MA: Edward Elger Publishing, 2006

Posted: 6 Feb 2010  

Mary E. Burfisher

U.S. Naval Academy

Sherman Robinson

International Food Policy Research Institute (IFPRI)

Karen Thierfelder

United States Naval Academy - Department of Economics

Date Written: February 1, 2004

Abstract

In this paper, we review the debate on "new regionalism," focusing on the tools used to evaluate regional trade agreements (RTAs). We find that much analysis uses tools from old trade theory in the Viner-Meade tradition, focusing on trade creation, trade diversion, and terms-of-trade effects. These tools are adequate for the analysis of the effects of removing commodity trade barriers ("shallow" integration), but the comfortable Viner-Meade framework misses many of the impacts associated with new regionalism, which typically involves "deep integration," often between developing and developed countries. A framework for analyzing new regionalism should include dynamic changes such as trade-productivity links and endogenous growth theory, international factor mobility, the role of imperfect competition, rent seeking behavior, and political-economy considerations such as potential conflicts between regionalism and multilateralism. Agriculture poses problems for new regionalism because of high tariffs, the use of domestic subsidies and entrenched special interest groups, but the role of trade liberalization on its productivity is often overlooked. For developing countries, a crucial issue is whether and how regionalism can be part of a successful development strategy. While "new trade theory" is concerned with a number of the issues relevant to new regionalism, and is providing new tools, the work is eclectic and is far from providing a unified framework for empirical analysis of new regionalism. Both theoretical and empirical research is needed to improve the reach and scope of new trade theory applied to issues of new regionalism.

Suggested Citation

Burfisher, Mary E. and Robinson, Sherman and Thierfelder, Karen, Regionalism: Old and New, Theory and Practice (February 1, 2004). AGRICULTURAL POLICY REFORM AND THE WTO: WHERE ARE WE HEADING?, Giovanni Anania, Mary E. Bohman, Colin A. Carter, Alex F. McCalla, eds., Northampton, MA: Edward Elger Publishing, 2006. Available at SSRN: https://ssrn.com/abstract=1547949

Mary E. Burfisher (Contact Author)

U.S. Naval Academy ( email )

589 McNair Road
Annapolis, MD 21402
United States
410-293-6880 (Phone)

Sherman Robinson

International Food Policy Research Institute (IFPRI) ( email )

2033 K Street, NW
Washington, DC 20006
United States

Karen Thierfelder

United States Naval Academy - Department of Economics ( email )

589 McNair Road
Annapolis, MD 21402
United States

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