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11 J. Common Mkt. Stud. 1 (1972)

handle is hein.journals/jcmks11 and id is 1 raw text is: TRADE LIBERALIZATION AND STRUCTURAL CHANGES IN LATIN AMERICA* By J. AHMAD Associate Professor of Economics, Sir George Williams University, Montreal, Canada ABSTRACT WIDE disparities in growth potential andperformance and hence, presum- ably an unequal sharing of benefits of trade liberalization, are among the most pressing issues facing the future course of economic integra- tion in South America. The customary indices of changes in intra- zonal trade among members of a preferential trade area do not adequately capture these tensions. This paper develops a framework based on differential rates of growth for analyzing the relative changes in production structure and per capita income in each member country vis-a-vis the corresponding set of free-trading partners. The empirical investigation is carried out for member countries of the Latin American Free Trade Association (LAFTA) and of the Central American Common Market (CACM) for the period of their existence. Preliminary results suggest that although 'reciprocity' of benefits has been an elusive goal, there is no evidence that structural imbalance in the continent is worsening. In fact, in terms of per capita incomes there appears to be a modest trend toward convergence. INTRODUCTION A major issue in the study ofregional economic integration emerges from a concern with the 'reciprocity' of benefits to member countries in a trading area. In formal trade theory it is not necessary for any single country to require reciprocal tariff concessions from trading partners in order to realize either the allocative'efficiency' or 'consumption' gains.' But the fact that reciprocity is the cornerstone of contemporary inte- * An earlier Spanish version of this paper was presented at the Canadian Association of Latin American Studies meetings in Mexico City, May 1971. I J. Bhagwati, 'Trade Liberalization anong LDCS, Trade Theory and GATT Rules', in J. N. Wolfe, Value, Capital and Growth: Papers in Honour of SirJohn Hicks (Chicago, 1968).

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