Publication by the IDB (Nov. 2019)

Trading Promises for Results

(edited by Mauricio Mesquita Moreira and Ernesto Stein)

Excessive expectations on the promises of free trade led to disappointment, skepticism and reform fatigue, and in some cases, to policy reversals.
Liberalization brought many benefits, including faster growth. Our study finds that a tariff cut accelerates per capita GDP growth. And most Latin Americans favor deeper integration.
Some sectors and workers lose with free trade, however, and have incentives to block trade reform. Implementing good trade policies requires a deep understanding of the political economy of trade policy and an adequate institutional architecture for trade policy management.
Succesful trade policies also require a complementary agenda to facilitate factor reallocation and protect those who are made worse off, in order to make the most of the opportunities offered by global integration, while mitigating associated risks.