The Regional Impact In Canada Of Free Trade PDF Download

Even before the Free Trade Agreement (FTA) between the U.S. and Canada came into force on January 1, 1989, a substantial body of literature had been assembled on the future agreement and its likely economic effects on both countries. Despite the large number of studies in both countries, there had been no systematic attempt to measure the FTA effects at the regional level. Unfortunately, regional effects of national and international policies such as trade liberalization have been perceived as less important than the measurement of the same effects at the national level. This study focuses attempts to rectify this situation by focusing on the different effects that national and international trade policies have on distinctive regions within a country by modeling the impact of the FTA regionally using an applied general equilibrium approach. The economic effects due to the FTA are presented by region (four in the U.S. and Canada), highlighting the changes in macroeconomic aggregates such as total income as well as the changes in the level of production of the different sectors in the economy, thus separating gainers and losers in each region. This study also incorporates interregional labor migration within the U.S. The results presented in this study show the need for more careful evaluation of the economic impact of national and international policies at the regional level.