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

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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.

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Authors and Affiliations

  1. Department of Economics and Business, Hanyang University, 1271 Sa-1 Dong, Kyunggi-Do, Ansan, South Korea, 426-791

    Gouranga Gopal Das

  2. World Bank, Washington, D.C., USA

    Soamiely Andriamananjara

Authors
  1. Gouranga Gopal Das
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  2. Soamiely Andriamananjara
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Correspondence to Gouranga Gopal Das.

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JEL no.

D58, F13, O33

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Das, G., Andriamananjara, S. Hub-and-Spokes Free Trade Agreements in the Presence of Technology Spillovers: An Application to the Western Hemisphere. Rev. World Econ. 142, 33–66 (2006). https://doi.org/10.1007/s10290-006-0056-x

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  • DOI: https://doi.org/10.1007/s10290-006-0056-x

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