Trade, Factor Mobility and the Extent of Economic Integration: Theory and Evidence

Irena Mikolajun and Jean-Marie Viaene
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Irena Mikolajun: Erasmus University Rotterdam, the Netherlands
Jean-Marie Viaene: Erasmus University Rotterdam, the Netherlands

No 15-096/VI, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: The Middle East was once seen as a medieval great globalized force. Nowadays it shows one of the lowest intra-regional trade in the world and therefore it is claimed that the region is poorly integrated. Yet, with the steady flow of workers across national borders of the Middle East is this conjecture correct? To answer this question the paper develops an integration benchmark which consists of the steady state production equilibrium characterized by free trade and perfect factor mobility. We apply metrics to measure the distance between this benchmark and the data and compare three different regions of the world (EU, Latin America and Middle East). We find that, despite large differences in trade patterns, measures of economic integration in 2009 are remarkably close across regions. For example, we calculate that economic integration in the Middle East is just 2.4% below that of the European Union.

Keywords: Economic integration; Euclidean distance; factor shares; international migration (search for similar items in EconPapers)
JEL-codes: E13 F15 F21 F4 O11 O53 O54 (search for similar items in EconPapers)
Date: 2015-08-11
New Economics Papers: this item is included in nep-ara and nep-mig
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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20150096

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