OECD Trade Policy Papers

This series is designed to make available to a wider readership selected trade policy studies prepared for use within the OECD.

NB. No. 1 to No. 139 were released under the previous series title OECD Trade Policy Working Papers.


Market Opening, Growth and Employment

What can further market integration contribute to growth and employment? A series of hypothetical trade reform scenarios explores what countries at different levels of development can expect to gain from reforming tariffs, non-tariff barriers, trade facilitation and domestic support to agriculture. Simulations of multilateral and regional trade agreements with the OECD METRO model show that positive effects are higher when more countries participate in trade integration because it broadens market opportunities, widens the range of products at lower prices, and reduces trade diversion. Smaller economies especially benefit. Firms in these economies can better specialise in international production networks as they have access to larger and more differentiated markets and also benefit from enhanced market access on the products they already produce. While trade integration boosts demand and lifts wages and factor returns, the required production adjustments also leads to reallocation of workers between sectors. The analysis highlights some of the distributional implications and emphasises the need for labour force adjustment policies to accompany trade integration.


Keywords: income distribution, regional trade agreements, market access, CGE model, Asia, agriculture support, International trade
JEL: C54: Mathematical and Quantitative Methods / Econometric Modeling / Quantitative Policy Modeling; F16: International Economics / Trade / Trade and Labor Market Interactions; F15: International Economics / Trade / Economic Integration; C68: Mathematical and Quantitative Methods / Mathematical Methods; Programming Models; Mathematical and Simulation Modeling / Computable General Equilibrium Models; F13: International Economics / Trade / Trade Policy; International Trade Organizations; Q17: Agricultural and Natural Resource Economics; Environmental and Ecological Economics / Agriculture / Agriculture in International Trade
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