South–South trade: An analysis of trade integration in the G‐77

Abstract

This article investigates the economic impacts of greater trade integration in the Group of 77 (G‐77) through the GTAP model. The analyses are based on reductions in import tariffs on agricultural and industrial products, considering scenarios with and without the China participation. The economic impacts tend to strengthen production and trade in industrial sectors in already industrialised regions and agriculture in regions more dependent on this sector—pattern reinforced with China's presence. China's trade also leads to a drop in Gross Domestic Product (GDP) in some G‐77 countries, with these losses outweigh welfare gains mainly in some least developed countries.