Colombia and the NAFTA

FEDESARROLLO Working Paper Series No. 2

31 Pages Posted: 15 Dec 1997

See all articles by Maurizio Bussolo

Maurizio Bussolo

World Bank - Chief Economist Office for Europe and Central Asia

David Roland-Holst

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

Date Written: October 1997


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.

JEL Classification: D58, F13, F15

Suggested Citation

Bussolo, Maurizio and Roland-Holst, David, Colombia and the NAFTA (October 1997). FEDESARROLLO Working Paper Series No. 2. Available at SSRN: or

Maurizio Bussolo (Contact Author)

World Bank - Chief Economist Office for Europe and Central Asia ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

HOME PAGE: http://

David Roland-Holst

Mills College and CEPR ( email )

5000 MacArthur Boulevard
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Oakland, CA 94613-1301
United States
510-430-2248 (Phone)
510-430-2304 (Fax)

Centre for Economic Policy Research (CEPR) ( email )

United Kingdom

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