Abstract
When deflated by export unit values, world-trade growth has fallen recently; when deflated by dollarized G7 GDP deflators, it has been stagnating since 1980. The ratio of aggregate nominal exports to nominal GDP for developed countries peaked in 1980, and has retreated since. Changes in geographical composition, and oil trade, account for only some of this. The paper argues that the trade slowdown may owe something to the belief that free trade is best only under perfect competition. A simple model of trade under imperfect competition is set up to demonstrate that: (1) tariff and quota barriers dominate laissez-faire as Nash strategies, and (2) that first-best policy involves free trade and industrial policies to correct the distortions at source. The paper ends by assessing the European Union's economic policies, and proposing some improvements. Copyright 1994 by Oxford University Press.
Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
