Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/87939
Authors: 
Fernández-Arias, Eduardo
Spiegel, Mark M.
Year of Publication: 
1997
Series/Report no.: 
Working Paper, Inter-American Development Bank, Office of the Chief Economist 341
Abstract: 
This paper examines the implications of a North-South trade accord where investments in the Southern partner nation exhibit country risk. Our analysis demonstrates that North-South trade accords can serve as credibility-enhancing mechanisms that induce additional foreign capital inflows into Southern partner nations. The presence of sovereign risk changes the tradeoffs between trade creation and diversion, enhancing the potential for regional trade accords to increase the welfare of accord members.
Document Type: 
Working Paper

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