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Colombia and the NAFTA

Maurizio Bussolo

World Bank - Development Prospects Group

David Roland-Holst

Mills College and CEPR; Centre for Economic Policy Research (CEPR)

October 1997

FEDESARROLLO Working Paper Series No. 2

This paper presents an overview of the most recent trade policy reforms in Colombia and a brief analysis of their potential effects on this country's trade flows. This set the stage for the main objective of this paper: a preliminary general equilibrium assessment of the economic effects of Colombia's hypothetical accession to the North American Free Trade Agreement. The results indicate that such an arrangement, dubbed here NAFTA+, has significant implications for Colombia, but very limited effects upon the NAFTA incumbents, the U.S., Canada, and Mexico. This follows intuitively from the size and proximity of the participating economies, but the sectoral and employment adjustments in Colombia are complex and would be difficult to anticipate from heuristic, partial equilibrium, or aggregate analysis. Generally speaking, Colombia would be a significant beneficiary of a NAFTA+ agreement, but the ensuing adjustments intensify traditional patterns of comparative advantage for this economy and, absent other co-ordinated policies, might undermine modernisation and sustainable growth. These results have implications for many NAFTA aspirants, but should not be generalised too freely. Each prospective entry should be evaluated by the same detailed empirical analysis as it is proposed for the Colombian case.

Number of Pages in PDF File: 31

JEL Classification: D58, F13, F15

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Date posted: December 15, 1997  

Suggested Citation

Bussolo, Maurizio and Roland-Holst, David, Colombia and the NAFTA (October 1997). FEDESARROLLO Working Paper Series No. 2. Available at SSRN: https://ssrn.com/abstract=45212 or http://dx.doi.org/10.2139/ssrn.45212

Contact Information

Maurizio Bussolo (Contact Author)
World Bank - Development Prospects Group ( email )
1818 H Street, N.W.
Washington, DC 20433
United States
HOME PAGE: http://econ.worldbank.org/staff/mbussolo
David Roland-Holst
Centre for Economic Policy Research (CEPR) ( email )
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
Mills College and CEPR ( email )
5000 MacArthur Boulevard
Kimball House-13
Oakland, CA 94613-1301
United States
510-430-2248 (Phone)
510-430-2304 (Fax)
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