Regionalism in World Food Markets: Implications for Trade and Welfare

This chapter surveys the role of regional trading groups in food and agricultural markets. It begins with a review of economic regionalism in general and then considers historical experience in food markets. Since ancient times, alliances and conquests have led to regional integration. The resulting economic growth has then helped to motivate and finance political expansion and to promote worldwide growth. However, rivalry among competing regions can be costly. The development of regional trade agreements (RTAs) may or may not be in conflict with global welfare. Many studies have addressed this issue, building on Viner. In order to assess the consequences of an RTA, it is necessary to consider what would be likely to happen in its absence: the counterfactual scenario, or what Winters calls the &s;anti-monde&s;. To be realistic, this alternative must be based on an appropriate analytical model, including specification of the policies that would be used in place of the RTA.