Trade Liberalisation and its Impact on Regional Development: Theoretical and Experimental Studies
The existing theoretical and empirical literature focusing on interconnections between international trade, trade liberalisation, and economic development provides ample evidence pertaining to nations and industries. However, another dimension of trade liberalisation — the assessment of the level of national or regional development — needs further research. This article sets out to analyse theoretical and empirical research works focusing on a varied spatial effect of expanding international trade on national economies and identifies factors affecting regional development. Firstly, it is established that expanding international trade is a more important source of growth for the regions of developing countries than for those of developed ones. Secondly, in terms of the regional impact of liberalisation, expanding trade has the most positive effect on border regions and those associated with lower cost of access to international markets. Thirdly, the analysis of regions having different industrial specialisatio n suggests that expanding international trade contributes to higher growth rates in the regions, having globally competitive national industries. The conclusions presented in this article can be used for formulating an industrial policy and a regional development policy for both small export-oriented economies, namely, the Baltic Sea states, and larger economies having uneven distribution of production resources.
2. Behrens, K. et al. 2007, Countries, regions and trade: On the welfare impacts of economic integration, European Economic Review, Vol. 51, no. 5, p. 1277—1301.
3. Brülhart, M. 2011, The spatial effects of trade openness: a survey, Review of World Economics, no. 147, p. 59—83.
4. Brülhart, M., Crozet, M., Koenig, P. 2004, Enlargement and the EU periphery: the impact of changing market potential, The World Economy, Vol. 27, no. 6, p. 853—875.
5. Busse, M., Königer, J. 2012, Trade and economic growth: A re-examination of the empirical evidence, HWWI Research, available at: https://www.ifw-kiel.de/konfer/staff-seminar/paper/2012/Koeniger.pdf (accessed 02.02.2016).
6. Castilho, M., Menéndez, M., Sztulman, A. 2012, Trade Liberalization, Inequality, and Poverty in Brazilian States, World Development, Vol. 40, no. 4, p. 821—835.
7. Chiquiar, D. 2008, Globalization, regional wage differentials and the Stolper — Samuelson theorem: evidence from Mexico, Journal of International Economics, Vol. 74, no. 1, p. 70—93.
8. Chiquiar, D. 2005, Why Mexico’s regional income convergence broke down, Journal of Development Economics, Vol. 77, no. 1, р. 257—275.
9. Crozet, M., Soubeyran, P. K. 2004, EU enlargement and the internal geography f countries, Journal of Comparative Economics, Vol. 32, no. 2, p. 265—279.
10. Daumal, M. 2013, The impact of trade openness on regional inequality: the cases of India and Brazil, The International Trade Journal, Vol. 27, no. 3, p. 243—280.
11. Dollar, D. 1992, Outward-oriented developing economies really do grow more rapidly: evidence from 95 LDCs, 1976—1985, Economic development and cultural change, Vol. 40, no. 3, p. 523—543.
12. Edwards, S. 1992, Trade orientation, distortions and growth in developing countries, Journal of development economics, Vol. 39, no. 1, p. 31—57.
13. Egger, P., Huber, P., Pfaffermayr, M. 2005, A note on export openness and regional wage disparity in Central and Eastern Europe, The Annals of Regional Science, Vol. 39, no. 1, p. 63—71.
14. Ezcurra, R., Rodríguez-Pose, A. 2013, Does Economic Globalization affect Regional Inequality? A Cross-country Analysis, World Development, no. 52, p. 92—103.
15. Ezcurra, R., Rodríguez-Pose, A. 2014, Trade openness and spatial inequality in emerging countries, Spatial Economic Analysis, Vol. 9, no. 2, p. 162—182.
16. Faber, B. 2007, Towards the spatial patterns of sectoral adjustments to trade liberalisation: The case of NAFTA in Mexico, Growth and Change, Vol. 38, no. 4, p. 567—594.
17. Fajgelbaum, P., Coşar, A. 2013, Internal Geography, International Trade, and Regional Specialization, National Bureau of Economic Research, NBER Working Paper, no. 19697, available at:http://www.nber.org/papers/w19697.pdf (accessed 02.11.2015).
18. Fujita, M., Krugman, P. R., Venables, A. 2001, The spatial economy: Cities, regions, and international trade, MIT press.
19. Golub, S. S., Hsieh, C.-T. 2000, Classical Ricardian theory of comparative advantage revisited, Review of International Economics, Vol. 8, no. 2, p. 221—234.
20. Gonzalez Rivas, G. 2007, The effects of trade openness on regional inequality in Mexico, The Annals of Regional Science, Vol. 41, no. 3, p. 545—561.
21. Hanson, G. 1997, Increasing returns, trade and the regional structure of wages, The Economic Journal, no. 107 (440), p. 113—133.
22. Hanson, G. 1998, Regional adjustment to trade liberalization, Regional Science and Urban Economics, Vol. 28, no. 4, p. 419—444.
23. Henderson, J. 1982, Systems of cities in closed and open economies, Regional Science and Urban Economics, Vol. 12, no. 3, p. 325—350.
24. Irwin, D., Terviö, M. 2002, Does trade raise income?: Evidence from the twentieth century, Journal of International Economics, Vol. 58, no. 1, p. 1—18.
25. Kanbur, R., Zhang, X. 2005, Fifty years of regional inequality in China: a journey through central planning, reform, and openness, Review of development Economics, Vol. 9, no. 1, р. 87—106.
26. Krugman, P. 1991, Increasing Returns and Economic Geography, ournal of Political Economy, Vol. 99, no. 3, p. 483—499.
27. Krugman, P. 1979, Increasing returns, monopolistic competition, and international trade, Journal of international Economics, Vol. 9, no. 4, p. 467—479.
28. Krugman, P., Elizondo, R. 1996, Trade policy and the third world metropolis, Journal of development economics, Vol. 49, no. 1, p. 137—150.
29. Lancaster, K. 1980, Intra-industry trade under perfect monopolistic competition, Journal of international Economics, Vol. 10, no. 2, p. 151—175.
30. MacDougall, G. D. A. 1951, British and American exports: A study suggested by the theory of comparative costs. Part I, The Economic Journal, no. 61(244), p. 697—724.
31. Martincus, C. V. 2010, Spatial Effects of Trade Policy: Evidence from Brazil, Journal of Regional Science, Vol. 50, no. 2, p. 541—569.
32. Melitz, M. 2003, The impact of trade on intra-industry reallocations and aggregate industry productivity, Econometrica, Vol. 71, no. 6, p. 1695—1725.
33. Milanovic, B. 2005, Half a World: Regional inequality in five great federations, Journal of the Asia Pacific Economy, Vol. 10, no. 4, p. 408—448.
34. Nunn, N. 2007, Relationship-specificity, incomplete contracts, and the pattern of trade, The Quarterly Journal of Economics, р. 569—600.
35. Paluzie, E. 2001, Trade policy and regional inequalities*, Papers in regional science, Vol. 80, no. 1, p. 67—85.
36. Petrakos, G., Rodríguez-Pose, A., Rovolis, A. 2003, Growth, integration and regional inequality in Europe, Discussion Paper Series, Vol. 9, no. 3, p. 39—62.
37. Ramcharan, R. 2009, Why an economic core: domestic transport costs, Journal of Economic Geography, Vol. 9, no. 4, p. 559—581.
38. Rauch, J. E. 1991, Comparative advantage, geographic advantage and the volume of trade, The Economic Journal, no. 101(408), p. 1230—1244.
39. Rodríguez-Pose, A. 2012, Trade and regional inequality, Economic Geography, no. 88, р. 109—136.
40. Rodríguez-Pose, A., Ezcurra, R. 2010, Does decentralization matter for regional disparities? A cross-country analysis, Journal of Economic Geography, no. 10, p. 619—644.
41. Rodríguez-Pose, A., Gill, N. 2006, How does trade affect regional disparities? World Development, Vol. 34, no. 7, p. 1201—1222.
42. Rodríguez-Pose, A., Sánchez-Reaza, J. 2005, Economic polarization through trade: trade liberalization and regional inequality in México. In: Spatial Inequality and Development, Oxford, UK, Oxford University Press.
43. Villar, O. 1999, Spatial distribution of production and international trade: a note, Regional Science and Urban Economics, Vol. 29, no. 3, p. 371—380.
44. Zhang, X., Zhang, K. 2003, How does globalisation affect regional inequality within a developing country? Evidence from China, Journal of Development Studies, no. 39, p. 47—67.