When Will WTO Membership Signal Commitment to Free Trade by A Developing Country
When Will WTO Membership Signal Commitment to Free Trade by A Developing Country
- 세종대학교 경제통합연구소
- Journal of Economic Integration
- 제19권 제2호
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2004.06317 - 331 (15 pages)
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A signalling game involving three parties: a developing country, the WTO and a developed country is outlined. The developing country might be tempted to renege or deviate from free trade. Although the costs of reneging from free trade result in a loss of credibility, the costs come in the future and are discounted. Short-term gains include revenues from import taxes that are important to the public finances of low-income countries. Membership of a rules based organisation such as the WTO can act as a credible commitment device. In these circumstances, however, the South`s commitment to free trade depends upon a clear signal from the North that it too is committed to free trade. Otherwise the South will continue to deviate from optimal and freer trade policies.
Ⅰ. Introduction
Ⅱ. Credibility of Free Trade Policies in Developing Countries
Ⅲ. Commitment Technologies for the Government in the South
Ⅳ. The Commitment to Free Trade in the North: Signal to the South
Ⅴ. Conclusion
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