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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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