TheDevelopmentTrinity:HowRegionalIntegra7onImpactsGrowth,InequalityandPoverty

MariaV.Sokolova(UNCTAD)(jointwithAmeliaSantos-Paulino(UNCTAD)andAlisaDiCaprio(R3))

4October2018Rome,Italy

MoOvaOon

•  IntheworldofmulOlateraltradeliberalisaOon,regionaltradeintegraOonistakingover– EveryWTOmemberisapartnerofatleast1regionaltradeagreement(RTA)

–  IsregionalisaOonunderminingorimprovingthedevelopment?

•  Docountriesreapthebenefitsinthesameway?

DevelopmentofregionalrelaOonshipsintheworld

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Literaturereview(1/2)•  RTAsarenolongerabouttrade

–  Viner(1950)tradeliberalisaOon;–  TTIP/TPP/ASEAN/USA-Can-Mex,etcincludeamenufromecommerce,

womenempowerment,dataprotecOon,humanrights,sustainabilityconsideraOons(latestisRodrik2018thatclaimsthattradecreaOonanddiversionisnotsufficienteffectofRTAs)

•  WelfareimpactsofRTAsareambiguous–  Eventrade-induced(Baier&Bergstrand,2007,2017;Daietal.,2014)–  Tradeandpriceindexes(WintersandChang,2002),economicgrowth

(HurandPark,2012)isbelievedtobeoverallaposiOverelaOonship–  WelfaregainsofintegraOondependoninput(Arokolakis,CosOnotand

Rodriguez-Clare,2013)

Literaturereview(2/2)•  EUintroducedsustainabilityconsideraOons(SIA)intoRTAnegoOaOons

•  InequalitywithincountriesisrisingatthesameOmeastrade(e.g.GoldbergandPavcnik,2007)

•  •  Tradecanincreaseabsolutepoverty(e.g.Changetal.,2009)ordecreaseit

(BorrazandFerrés,2012)

•  Etc,etc,etc…

RTAsheterogeneity

InternalRegionalisaOon

•  Ashareofregionaltradeinoveralltrade•  Reflectssovereigncountry’sparOcipaOoninRTAs

InternalRegionalizaOonandGrowth

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InternalregionalizaOonandinequality

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InternalregionalizaOonandpoverty

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Poverty in 1995, or in any of the years 1990-1995 due to data availability

ExternalRegionalisaOon

•  “Noodles”and“spaghem”ofRTAsexist•  AcountryisexposedtoregionalizaOonpolicyofitstrading

partners•  Evenifyouarenot“implemenOng”thedecision,youare

affected

ExternalregionalisaOonandGrowth

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Other countries Sub-Saharan Africa Developing Asia Latin America

ExternalregionalisaOonandinequality

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ExternalregionalisaOonandpoverty

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Poverty in 1991-1995

Empiricalstrategy(1of3)

•  Usedummiesforexploringnon-lineareffectofregionalisaOon•  Groups:

–  LDCs–  Developmentclusters(LaOnAmericaandCarribean,Sub-SaharanAfrica,

developingAsia)–  Incomegroups(LowIncomeCountries,LowerMiddleIncome)

•  OLS/GMMon5-yearaverages•  Data1990-2015,coveringallcountries

InternalregionalizaOonandgrowth

Overallresults

ThebenefitsofregionalintegraOonareunevenandnon-linear,e.g.:•  DevelopingAsiais

gainingthemost•  LaOnAmericabenefits

mostfrominternalregionalisaOon

•  GainsforSub-SaharanAfricaaredubious

•  ResultissourcedfromLowMiddleIncomeCountries

Results

•  RegionalintegraOonmaoersas– Decisionofasovereigncountry(Reg1)– Asexposurethroughtradingpartners(Reg2)

•  RegionalintegraOon(throughRTAs)canimprovethedevelopmentpathofacountry

•  Theeffectisnon-linear,itdependsonspecificdesigninthegeographicarea

Takeaway

•  MulOlateraltraderulesexist,andtheyarenotenoughfordevelopment

•  RegionalisaOoncanimprovethedevelopmentresultsoftradeliberalisaOon

•  Butithastobe“wellsuited”forcertaincontexts

Thankyou!

Latestopenlyavailableversionis{here}Forthecurrentversion,sendanemailto

maria.sokolova@un.org