Comparative Advantage and the Welfare Impact of European Integration / Andrei A. Levchenko, Jing Zhang.

Format:

Book

Author/Creator:

Levchenko, Andrei A.

Contributor:

National Bureau of Economic Research.

Zhang, Jing.

Series:

Working Paper Series (National Bureau of Economic Research) no. w18061.

NBER working paper series no. w18061

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2012.

Summary:

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 multisector 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%, rang- ing 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.

Notes:

Print version record

May 2012.