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EU-Enlargement and Beyond: A Simulation Study on EU and Russia Integration

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  • Sulamaa, Pekka
  • Widgrén, Mika

Abstract

This paper examines the economic effects of the opening of the Russian Federation. The analysis carried out in the paper is two-fold. First we simulate the impact of the eastern enlargement of the EU and, second, we analyse how deeper integration between the EU and Russia contributes to this. The analysis is carried out with GTAP computable general equilibrium model. We find that there is a trade-off between the two roads of European integration arrangements. Eastern enlargement seems, even in its very deep form, be beneficial for all EU regions without causing substantial welfare losses outside the Union. EU-Russia integration, on the other hand, has different impact. To be beneficial for Russia free trade between the EU and Russia requires improved productivity in the latter, which may be due to better institutions or increased FDI. This might make the negotiations of the agreement cumbersome and if agreed its implementation difficult.

Suggested Citation

  • Sulamaa, Pekka & Widgrén, Mika, 2004. "EU-Enlargement and Beyond: A Simulation Study on EU and Russia Integration," Discussion Papers 356, VATT Institute for Economic Research.
    • Handle: RePEc:fer:dpaper:356
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    7. Widgren, Mika & Sulamaa, Pekka, 2003. "EU Enlargement and Beyond: A Simulation Study on EU and CIS Integration," CEPR Discussion Papers 3768, C.E.P.R. Discussion Papers.
    8. Richard E. Baldwin & Joseph F. Francois & Richard Portes, 1997. "The costs and benefits of eastern enlargement: the impact on the EU and central Europe," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 12(24), pages 125-176.
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    Cited by:

    1. Alho, Kari E.O. & Kaitila, Ville & Widgrén, Mika, 2005. "Speed of Convergence and Relocation: New EU Member Countries Catching up with the Old," Discussion Papers 963, The Research Institute of the Finnish Economy.
    2. Sulamaa, Pekka & Widgrén, Mika, 2005. "Asian Regionalism versus Global Free Trade: A Simulation Study on Economic Effects," Discussion Papers 985, The Research Institute of the Finnish Economy.
    3. Andreas Benedictow & Daniel Fjærtoft & Ole Løfsnæs, 2010. "Oil dependency of the Russian economy: an econometric analysis," Discussion Papers 617, Statistics Norway, Research Department.
    4. Sulamaa, Pekka & Widgrén, Mika, 2005. "Economic Effects of Free Trade between the EU and Russia," Discussion Papers 969, The Research Institute of the Finnish Economy.
    5. Susanna Kinnman & Magnus Lodefalk, 2009. "A Global Baltic:Potential Gains from Trade Liberalisation in the Baltic Sea States," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 9(1), pages 55-79, July.
    6. Alho, Kari E.O. & Kaitila, Ville & Widgrén, Mika, 2008. "Offshoring, Relocation and the Speed of Convergence in the Enlarged European Union," Discussion Papers 1156, The Research Institute of the Finnish Economy.
    7. Fontana, Marzia, 2006. "Modelling the gender effects of trade: current findings and ways forward," Conference papers 331535, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    8. Kaitila, Ville, 2007. "Free Trade between the EU and Russia - Sectoral Effects and Impacts on Northwest Russia," Discussion Papers 1087, The Research Institute of the Finnish Economy.
    9. Benedictow, Andreas & Fjærtoft, Daniel & Løfsnæs, Ole, 2013. "Oil dependency of the Russian economy: An econometric analysis," Economic Modelling, Elsevier, vol. 32(C), pages 400-428.
    10. Bchir, Mohamed Hedi & Hammouda, Hakim Ben, 2008. "Does theory matters in Global CGE models," Conference papers 331807, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.

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    More about this item

    Keywords

    Integration; Free Trade Agreement; GTAP; EU; Russia; Economic growth; Taloudellinen kasvu; International comparisons; Kansainväliset vertailut; Labor market and policies promoting economic growth; Työmarkkinat ja kasvua tukeva politiikka;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation

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