What Do Trade Agreements Really Do

By Dani Rodrik. 2018

317 citations recorded by the source corpus.

As trade agreements have evolved and gone beyond import tariffs and quotas into regulatory rules and harmonization, they have become more difficult to fit into received economic theory. Nevertheless, most economists continue to regard trade agreements such as the Trans Pacific Partnership (TPP) favorably. The default view seems to be that these arrangements get us closer to free trade by reducing transaction costs associated with regulatory differences or explicit protectionism. An alternative perspective is that trade agreements are the result of rent-seeking, self-interested behavior on the part of politically well-connected firms – international banks, pharmaceutical companies, multinational firms. They may result in freer, mutually beneficial trade, through exchange of market access. But they are as likely to produce purely redistributive outcomes under the guise of “freer trade.”

Subfields: Economics and Econometrics, Political Science and International Relations, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/119811ba842489322862f549b8941831d442ca20

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Citations in the corpus

• Intellectual monopoly in global value chains (2019, background): “…of global innovation to developing countries’ patents to compensate for what is in effect a pure transfer of rents from poor to rich countries “ (Rodrik, 2018, p. 5) Stricter IPRs may also limit developing countries’ policy options, shrinking of their ‘development space’ as they reduce their…”