spaghetti bowl effect

546 views
0

spaghetti bowl effect

In: Economics

In the mid 20th century, international trade was handled by an international organization now called the World Trade Organization. WTO deals helped to streamline trade by creating rules that applied to all members (pretty much every country) and didn’t allow anyone to play favorites. However, it eventually became difficult to change the WTO rules because everyone involved had to agree. Instead, countries have started to make trade agreements directly with each other. Some economists think this is a bad idea because the increased regulatory overhead that comes with managing all those agreements may actually decrease the amount of trade. They call this the “spaghetti bowl effect” because that’s what it looks like when you draw all these individual trade agreements on the map. It’s not yet a settled question whether these economists are right.

For a metaphor, consider the problem of connecting with friends and family. One option is to only use Facebook. Pretty much everyone has an account there, so you can do all your socializing in one place. However, some people don’t like Facebook and may prefer to connect with you over WhatsApp, Snapchat, Hangouts, etc. Maintaining an account on each of those services lets you connect better with some people than you would on Facebook, but it’s also more of a hassle. It’s not immediately clear which approach is better.