Small State Regional Cooperation, South-South and South-North Migration, and International Trade
This paper provides a different basis than previous analyses for regional bloc formation and regional migration. Due to low bargaining power and fixed costs, small states face a severe disadvantage in negotiations with the rest of the world and mig...
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| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
2012
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| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20100507111433 http://hdl.handle.net/10986/3783 |
| Summary: | This paper provides a different basis
than previous analyses for regional bloc formation and
regional migration. Due to low bargaining power and fixed
costs, small states face a severe disadvantage in
negotiations with the rest of the world and might benefit by
forming a regional bloc. The study a) presents a general
equilibrium model where bargaining power, international and
regional negotiation costs, number of issues negotiated, and
accession rule to the bloc determine its size and welfare
impact; and b) examines the impact of international
migration as well as the migration-trade relationship. The
main findings are: i) the likelihood of regional bloc
formation, its size and welfare impact, increases with
international negotiation costs and the number of issues
negotiated, and decreases with regional negotiation costs;
ii) bloc size is optimal (below the optimum) if an accession
fee is (is not) charged; iii) South-South migration raises
bloc size and welfare; iv) South-South migration and trade
are complements under market access negotiations and are
substitutes under negotiations for unilateral transfers as
well as under migrant remittances; and v) South-North
migration and bloc formation, and South-North and
South-South migration, are substitutes for the states that
benefit from membership in the bloc. |
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