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Review of World Economics

, Volume 142, Issue 1, pp 33–66 | Cite as

Hub-and-Spokes Free Trade Agreements in the Presence of Technology Spillovers: An Application to the Western Hemisphere

  • Gouranga Gopal Das
  • Soamiely Andriamananjara
Article

Abstract

Using a comparative-static general equilibrium model in the context of the Western Hemisphere, this paper compares the economic effects of a “hub-and-spokes” type of bilateral trade configuration (with Chile being the hub) with those of a more comprehensive regional FTA (namely, the FTAA). The model is augmented to account for the possibility of technology spillovers and its effective assimilation among participating economies. In particular, absorptive capacity, governance factor, proximity and socio-institutional congruence conjointly determine an economy’s capacity to capture the technology that is transmitted from the developed spoke United States to other regions.

Keywords

Hub and spokes Free Trade Areas technology transfer absorption governance adjacency welfare preference dilution 

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Copyright information

© The Kiel Institute 2006

Authors and Affiliations

  1. 1.Department of Economics and BusinessHanyang UniversityKyunggi-Do, AnsanSouth Korea
  2. 2.World BankWashingtonUSA

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