Trade openness Effects on Economic Development
How trade openness affects the economic development. The empirical evidence indicates that a trade threshold exists below which greater trade openness has beneficial effects on economic growth and above which the trade effect on growth declines. As with most regional integration schemes, the underlying economic rationale of the agreement is to provide greater opportunities to reap economies of scale, greater competition, a more attractive internal market for investment (both foreign and domestic), and an acceleration of intra-regional trade. The paper is organised as follows: the second section provides an overview of the theoretical literature regarding industrial geography focussing on recent contributions collectively know as the ‘new economic geography’ and discussing its possible implications
