Publication: Free Trade and Subnational Development: Economic Activity and Human Welfare
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Date
2025-02-11
ISSN
0258-6770
Published
2025-02-11
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Abstract
This paper delves into the subnational relationship between free trade agreements (FTAs) and human development worldwide. Utilizing a difference-in-differences and an event-study approach with high-spatial-resolution land-cover data and a comprehensive time series of national-level FTA indicators for 207 countries, the study quantifies the effects of FTAs on subnational development. The findings indicate a small negative impact of FTAs on the Human Development Index but a notable positive impact on economic activity, with urbanized regions benefiting the most. Unequal and more vulnerable regions grapple with declining human development indicators. The depth of FTAs does not sway these outcomes. These patterns raise questions about the inclusivity and equitable distribution of the benefits of trade liberalization. While prior literature has examined the national implications of FTAs, this paper provides insight into the subnational repercussions of FTAs. It emphasizes the role of inequality in hindering holistic developmental benefits from FTAs.
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“Cruzatti C, John. 2025. Free Trade and Subnational Development: Economic Activity and Human Welfare. World Bank Economic Review. © World Bank. http://hdl.handle.net/10986/42794 License: CC BY 3.0 IGO.”
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World Bank Economic Review
1564-698X
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