THE GLOBAL ECONOMIC CONSEQUENCES OF THE URUGUAY ROUND

This paper examines the provisions of the recently completed Uruguay R ound and evaluates the qualitative and quantitative effects of the Rou nd on major countries and regions of the world. The implications of th e Uruguay Round are measured using the G-cubed multicountry model. Thi s model captures macroeconomic and sectoral linkages within the global economy. This study differs from other studies in that it considers t he dynamic adjustment path, the impact of expectations formation, and the sectoral as well as macroeconomic consequences of the Round. The r esults are compared with other studies of the Uruguay Round. Ignoring major changes in productivity induced by the Round, it is found that t he gains to the world economy are likely to be around $200 billion (19 90) per year by the year 2000. The distribution of the gains across re gions from the Round differ from other studies because of the adjustme nt of international capital flows. Private capital flows to regions th at undertake the most extensive liberalization initially worsen their trade positions. In regions that liberalize less and experience a capi tal outflow, the production gains tends to be less than conventional s tudies find. The adjustment of private capital has important implicati ons for exchange rates, and therefore for the adjustment of the intern ational trading system over the decade of the implementation of the Ro und.