Comparative Advantage and the Welfare Impact of European Integration
Andrei Levchenko and
Jing Zhang ()
No 626, Working Papers from Research Seminar in International Economics, University of Michigan
This paper investigates the welfare gains from European trade integration, and the role of comparative advantage in determining the magnitude of those gains. We use a multi-sector Ricardian model implemented on 79 countries, and compare welfare in the 2000s to a counterfactual scenario in which East European countries are closed to trade. For West European countries, the mean welfare gain from trade integration with Eastern Europe is 0.16%, ranging from zero for Portugal to 0.4% for Austria. For East European countries, gains from trade are 9.23% at the mean, ranging from 2.85% for Russia to 20% for Estonia. For Eastern Europe, comparative advantage is a key determinant of the variation in the welfare gains: countries whose comparative advantage is most similar to Western Europe tend to gain less, while countries with technology most different from Western Europe gain the most.
Keywords: European integration; Ricardian models of trade; welfare; comparative advantage (search for similar items in EconPapers)
JEL-codes: F11 F14 F15 (search for similar items in EconPapers)
Pages: 47 pages
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Journal Article: Comparative advantage and the welfare impact of European integration (2012)
Working Paper: Comparative Advantage and the Welfare Impact of European Integration (2012)
Working Paper: Comparative Advantage and the Welfare Impact of European Integration (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:mie:wpaper:626
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