Winners and Losers from Regional Integration Agreements

Anthony Venables

No 2528, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: How are the benefits - and costs - of a customs union divided between member countries? Outcomes depend on the comparative advantage of member countries, relative to each other and to the rest of the world. Countries with a comparative advantage between that of their partners and the rest of the world do better than countries with an 'extreme' comparative advantage. As a consequence, integration between low income countries tends to lead to divergence of member country incomes, while agreements between high income countries cause convergence. Results suggest that developing countries are likely to be better served by 'north-south' than by 'south-south' free trade agreements.

Keywords: Regional integration; Customs union; Trade creation; Trade diversion (search for similar items in EconPapers)
JEL-codes: F10 F15 (search for similar items in EconPapers)
Date: 2000-08
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Citations: View citations in EconPapers (10)

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