Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/90672
Authors: 
Olarreaga, Marcelo
Year of Publication: 
1998
Series/Report no.: 
WTO Staff Working Paper ERAD-98-03
Abstract: 
This paper argues that interests of nationals and owners of home-based foreign capital in the formation of a Trade Agreements (TA) are not antagonistic, except under rather particular assumptions on initial tariffs among potential members. Further, if initial tariffs are endogenously determined through an industry-lobbying process, then TA that would have been immiserising in the absence of Foreign Direct Investment (FDI), may be welfare-enhancing in the presence of foreign-owned firms. The rationale is linked to the effect that the entry of FDI has on the pre-TA tariff, through contributions to the incumbent government. These results may help explain recent integration programs between developed and developing countries.
Subjects: 
Trade Agreement
Foreign Direct
Political Economy
JEL: 
F12
F15
F23
Document Type: 
Working Paper

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