Free Trade Blocs Threaten Global Prosperity Unless Organized Around Comparative Advantage
Regional free trade zones like NAFTA and the EU have been successful in recent years. This paper looks at how trading blocs can either help or hurt global free trade. By comparing traditional comparative advantages and economies of scale, the researchers found that the type of customs union within a bloc can either lead to trade wars or expanded global trade. The way trade is organized within blocs affects trade relations between them and the world economy.