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In this chapter the theoretical framework of the book is laid out. This is important to do to understand what a groundbreaking achievement the Pacific Alliance is. Liberal Free trade theory is used against the context of the Latin American experience with free trade regimes prior to the Great Depression. Strategic Trade theory is used to describe and evaluate the Import-Substitution-Industrialization policies of protectionism that Latin American countries have so often applied with little success. Finally, an Ordoliberal perspective, integrating New Institutional Economics and Public Choice contributions, is applied to the understanding of the new institutional arrangements behind competition laws and free trade agreements.
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