Post-Neoliberal Globalization: International Trade Rules for Global Prosperity

Martin M. Guzman and Joseph Stiglitz

No 32533, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper analyzes frameworks for the design of the rules for international trading, assuming that it is possible to have some rule of law. In the Arrow-Debreu benchmark, where there is no economic power and political power is seemingly irrelevant, there is no need for trade agreements – free trade is the optimal policy for each country. But under even minimal deviations from that benchmark, trade agreements matter. We focus on environments in which there are market failures, technology is endogenous, and there is political power. Power dynamics play, for instance, a critical role in the design, implementation, and enforcement of agreements, with the latter being a critical difference between international agreements and domestic contracts and a key determinant of the feasibility and consequences of agreements. With endogenous technology, trade rules proscribing industrial policies may lead to lower growth and greater cross-country inequalities. Finally, we develop a framework which may be useful in the design and implementation of trade rules.

JEL-codes: B17 F13 F15 F50 O24 Q56 (search for similar items in EconPapers)
Date: 2024-06
New Economics Papers: this item is included in nep-int
Note: IO ITI POL
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Published as Martin Guzman & Joseph E Stiglitz, 2024. "Post-neoliberal globalization: international trade rules for global prosperity," Oxford Review of Economic Policy, vol 40(2), pages 282-306.

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