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Comparative Advantage and the Welfare Impact of European Integration

Jing Zhang () and Andrei Levchenko

No 819, 2011 Meeting Papers from Society for Economic Dynamics

Abstract: 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 75 countries, and compare welfare in the 2000s to a counterfactual scenario in which Eastern European countries are closed to trade. For Western European countries, the mean welfare gain from trade integration with Eastern Europe is 0.1%, ranging from zero for Portugal to 0.35% for Austria. Comparative advantage is a key determinant of the variation in these welfare gains: countries whose comparative advantage is most similar to Eastern Europe tend to gain the least, while countries with technology most different from Eastern Europe gain the most.

Date: 2011
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Related works:
Journal Article: Comparative advantage and the welfare impact of European integration (2012) Downloads
Working Paper: Comparative Advantage and the Welfare Impact of European Integration (2012) Downloads
Working Paper: Comparative Advantage and the Welfare Impact of European Integration (2012) Downloads
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