Can South-South Trade Liberalisation Stimulate North-South Trade?

29 Pages Posted: 7 Aug 2006

See all articles by Marco Fugazza

Marco Fugazza

United Nations - Trade Analysis Branch

Frederic Robert-Nicoud

University of Geneva - Department of Political Economics; Centre for Economic Policy Research (CEPR)

Date Written: June 2006

Abstract

This paper uses a combination of Ethier (1982) and Melitz's (2003) models to show that liberalizing trade among developing countries, so-called South-South trade, could contribute to improve the access to international markets of developing countries' would-be exporters. Lower trade barriers among developing countries has the effect of lowering the price of intermediate inputs and eventually allows exporters in those countries to serve international markets. We also compare unilateral and multilateral South-South trade liberalization and find that the latter unambiguously reduces the price of intermediates in all participating countries, whereas the former has ambiguous effects.

Keywords: South-South trade, market access, input-output linkages, value chain

JEL Classification: F12, F13, F15

Suggested Citation

Fugazza, Marco and Robert-Nicoud, Frederic L., Can South-South Trade Liberalisation Stimulate North-South Trade? (June 2006). CEPR Discussion Paper No. 5699, Available at SSRN: https://ssrn.com/abstract=922407

Marco Fugazza

United Nations - Trade Analysis Branch ( email )

Palais des Nations
Office E 8074
Geneva, 1211
Switzerland

Frederic L. Robert-Nicoud (Contact Author)

University of Geneva - Department of Political Economics ( email )

40, boulevard du Pont-d'Arve
Geneva 4, CH-1211
Switzerland
+41 22 379 8272 (Phone)
+41 22 379 8293 (Fax)

HOME PAGE: http://www.unige.ch/ses/ecopo/staff/robert/home.html

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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