The Impact of Trade Integration on Income Divergence & Global Imbalances

Assistant Professor Zhang Haiping

Regional trade agreements have gained momentum since the 1990s. According to some studies, the average member of the World Trade Organisation had agreements with more than 15 countries in 2010, a marked increase from just two in 1990. The cumulative number of regional trade agreements in force rose from less than 30 in 1990 to more than 260 in 2014.

There are indications that this trend will continue. Whether these agreements lead to convergence of the living standards among member states is a popular issue for economists and policymakers.

In this podcast, Assistant Professor Zhang Haiping of SMU School of Economics shares with us a model he has developed to explain the impact of trade integration on global imbalances, as well as income divergence in developed and developing countries.