| Will the Real "Natural Trading Partner" Please Stand Up? |
Maurice Schiff |
| World Bank |
| Copyright ©2001 The Journal of Economic Integration |
| ABSTRACT |
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Adherents to the "natural trading partner" hypothesis argue that forming a PTA is more likely to raise welfare if member countries already trade disproportionately with each other. Opponents of the hypothesis claim that the opposite is true: welfare is likely to be higher if member countries trade less with each other. This paper shows that neither analysis is correct and that the "natural trading partner" hypothesis can be rescued if it is redefined in terms of complementarity or substitutability rather than in terms of volume of trade. |
| Keywords:
Regional Integration | Partner Relations with the Rest of the World | Choice of Partner
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