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Regional integration and the prices of imports : an empirical investigation


  • Winters, L. Alan
  • Won Chang


The authors explore the effects on the terms of trade of regional economic integration. They show why it is an appropriate measure of the welfare effects of such integration, comparing it with the many ex post studies that base their conclusions on changes in the import shares of member and nonmember countries. They demonstrate, by using a simple strategic model, how member countries might gain in their terms of trade, and nonmembers lose, through a lowering of preferential tariffs. Most important, they show that measuring such price effects, though difficult, is feasible. This is the first ex post study of its kind, they believe, and an improvement over previous ex post studies on how integration affects the rest of theworld. Using finely disaggregated data about Spanish imports of finished manufactures from major OECD trading partners, despite their noisiness, they found a consistent story over all of the country pairs examined. They find that nonmembers (in this case, Japan and the United States) suffered detectable losses in terms of trade relative to European Community competitors in Spanish import markets for differentiated goods.

Suggested Citation

  • Winters, L. Alan & Won Chang, 1997. "Regional integration and the prices of imports : an empirical investigation," Policy Research Working Paper Series 1782, The World Bank.
  • Handle: RePEc:wbk:wbrwps:1782

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    References listed on IDEAS

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    Cited by:

    1. Robert W. Staiger & Kyle Bagwell, 1999. "An Economic Theory of GATT," American Economic Review, American Economic Association, vol. 89(1), pages 215-248, March.
    2. Kyle Bagwell & Robert W. Staiger, 2000. "GATT-Think," NBER Working Papers 8005, National Bureau of Economic Research, Inc.
    3. Getachew, Asgedom Tessema & Tadele, Ferede & Arega, Hailu & Fantu, Guta, 2001. "The Impact of Regional Economic Cooperation on the Ethiopian Manufacturing Sector: the Case of Common Market for Southern and Eastern Free Trade Area (COMESA-FTA)," Ethiopian Journal of Economics, Ethiopian Economics Association, vol. 10(1).
    4. Winters, L. Alan & Chang, Won, 2000. "Regional integration and import prices: an empirical investigation," Journal of International Economics, Elsevier, vol. 51(2), pages 363-377, August.


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