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EU, NAFTA, and Asian Responses: A Perspective from the Calculus of Participation

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  • Junichi Goto
  • Koichi Hamada

Abstract

This paper assesses the economic conditions for Asian countries to cope with the formation of EU and NAFTA. Is it desirable for them to form their own trading area? And, if desirable, is it better to have a closed one like the EAEC or a more open one like the APEC? Relying on public economics and the calculus of participation combined with the Dixit-Stiglitz-Krugman framework, we find the following: (i) the development of the EAEC by the leadership of Malaysia would be a natural response of Asian countries against two big blocs in the world, EU and NAFTA; (ii) it is natural for the United States to discourage this move because the formation of an economic bloc in Asia will have a negative economic impact on the non- Asian countries; (iii) it is natural for the U.S. to propose an opposing coalition like the APEC to nullify the possible economic impact of the EAEC; but (iv) perhaps the APEC will be a good roundabout way towards international free trade.

Suggested Citation

  • Junichi Goto & Koichi Hamada, 1995. "EU, NAFTA, and Asian Responses: A Perspective from the Calculus of Participation," NBER Working Papers 5325, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:5325 Note: ITI
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    File URL: http://www.nber.org/papers/w5325.pdf
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    References listed on IDEAS

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    1. Gros, Daniel, 1987. "A note on the optimal tariff, retaliation and the welfare loss from tariff wars in a framework with intra-industry trade," Journal of International Economics, Elsevier, vol. 23(3-4), pages 357-367, November.
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    Cited by:

    1. Winters, L. Alan, 1996. "Regionalism versus Multilateralism," CEPR Discussion Papers 1525, C.E.P.R. Discussion Papers.
    2. Baldwin, Richard, 2008. "Big-Think Regionalism: a Critical Survey," CEPR Discussion Papers 6874, C.E.P.R. Discussion Papers.
    3. Eromenko, Igor, 2002. "EU Enlargement to the East and its Impact on Non-accessing Countries, Applied General Equilibrium Analysis," MPRA Paper 67534, University Library of Munich, Germany.
    4. Hae-du Hwang, 2006. "APEC and emerging regionalism in North East Asia," Asia Europe Journal, Springer, vol. 4(4), pages 499-510, December.

    More about this item

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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