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

  • Pekka Sulamaa
  • Mika Widgrén

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.

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Paper provided by Government Institute for Economic Research Finland (VATT) in its series Discussion Papers with number 356.

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Date of creation: 16 Dec 2004
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Handle: RePEc:fer:dpaper:356
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  1. Thomas W. Hertel & Padma Swaminathan, 1996. "Introducing Monopolistic Competition into the GTAP Model," GTAP Technical Papers 309, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
  2. Risto Vaittinen, 2000. "Eastern Enlargement of the European Union - Transition in applicant countries and evaluation of the economic prospects with a dynamic CGE-model," Research Reports 64, Government Institute for Economic Research Finland (VATT).
  3. SULAMAA Pekka & WIDGRÉN Mika, . "EU Enlargement and Beyond: A Simulation Study on EU and CIS Integration," EcoMod2003 330700143, EcoMod.
  4. André Sapir, 2000. "Trade regionalism in Europe: towards an integrated approach," ULB Institutional Repository 2013/8142, ULB -- Universite Libre de Bruxelles.
  5. André Sapir, 1998. "The political economy of EC regionalism," ULB Institutional Repository 2013/8156, ULB -- Universite Libre de Bruxelles.
  6. Paul S. Armington, 1969. "A Theory of Demand for Products Distinguished by Place of Production (Une théorie de la demande de produits différenciés d'après leur origine) (Una teoría de la demanda de productos distinguiénd," IMF Staff Papers, Palgrave Macmillan, vol. 16(1), pages 159-178, March.
  7. Risto Vaittinen, 2004. "Trade Policies and Integration - Evaluations with CGE Models," Research Reports 109, Government Institute for Economic Research Finland (VATT).
  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;CES;MSH, vol. 12(24), pages 125-176, 04.
  9. Bhagwati, Jagdish & Greenaway, David & Panagariya, Arvind, 1998. "Trading Preferentially: Theory and Policy," Economic Journal, Royal Economic Society, vol. 108(449), pages 1128-48, July.
  10. repec:cup:cbooks:9781107011694 is not listed on IDEAS
  11. Ianchovichina, Elena & Robert McDougall, 2000. "Theoretical Structure of Dynamic GTAP," GTAP Technical Papers 480, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
  12. Hanoch, Giora, 1975. "Production and Demand Models with Direct or Indirect Implicit Additivity," Econometrica, Econometric Society, vol. 43(3), pages 395-419, May.
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