Trade bloc enlargement when many countries join at once

Abstract

This paper examines the effects of trade bloc enlargement, focusing on simultaneous country entries. Using the European Union as a case study, we identify three driving forces behind changes in trade flows and welfare gains: (1) reduced bilateral trade costs between candidates and current members, (2) candidates adopting the bloc’s trade policy towards outsiders, and (3) reduced trade costs among candidates. Our findings highlight the substantial impact of the third force, which for current candidates may account for at least a third of the welfare gains for candidates, sometimes exceeding the other two forces combined.

Rodolfo G. Campos

Economist

My research interests include macroeconomics, social insurance, and international economics.