
Economic Analysis of Free Trade Agreements
Spaghetti Bowl Effect and a Paradox of Hub and Spoke Network
- Haruo Horaguchi (Horaguchi H.)
- 세종대학교 경제통합연구소
- Journal of Economic Integration
- 제22권 제3호
- 등재여부 : KCI등재
- 2007.09
- 664 - 683 (20 pages)
This paper shows a new exposition of the Trade Diversion Effect when Free Trade Agreements are created. Hub and spoke type of trade networks cause systemic overproduction, and member countries exit from the markets, whereas perfectly connected networks create sustainable markets in any number of markets. Since there are two basic patterns for creating FTAs, bilateral and multilateral, a network pattern is derived from these negotiation patterns. The hub country may be aggressive in pursuing Free Trade Agreements with various countries, but accumulation of bilateral negotiations may cause Trade Diversion Effect in the regional economies.
Ⅰ. Introduction
Ⅱ. Basic Model
Ⅲ. General Exposition by Graph Theory
Ⅳ. Hub and Spokes in Five Markets
Ⅴ. Creation of Networks from the Hub and Spoke Type of Connection
Ⅵ. Some Cases from Network Theory
Ⅶ. Conclusion