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17 J. Common Mkt. Stud. 1 (1978-1979)

handle is hein.journals/jcmks17 and id is 1 raw text is: 






Journal of Common Market Studies
Volume XVII, No. i September 1978


      THE EFFECTS OF ECONOMIC

        INTEGRATION ON TRADE

                     By  DAVID  G. MAYES*
          Department  of Economics, University of Exeter

                           ABSTRACT
This article provides a critical analysis of the models and methods which have
been used to estimate the effects of economic integration on trade and suggests
the most fruitful lines of further development. Both the problem of the
examination of the effects of past events and problems in the prediction of
future changes are tackled. In particular the drawbacks of the method of
estimation of the effects of previous integration as a residual from models which
explain what would have happened had the integration not taken place are
shown. It is concluded that the most fruitful avenue of approach lies in the
estimation of models which provide an economic explanation of trade flows and
their changes, and can hence be used for both the explanation of the effects of
previous integration and the prediction of future events.

Over   the past twenty  years  a vast literature has sprung   up
attempting  to explain  what  happens  to trade when   countries
reduce or abandon  some or all of the barriers to free trade between
them.  Although  the subject is by no means so new the upsurge in
interest stems from the formation of trading areas in many parts of
the world. The irony of the situation is however that despite such
an  accumulation   of effort there is widespread   disagreement
between   investigators as to the most   appropriate method   of
analysis. To  some   extent this disagreement   stems  from  the
pursuance  of different aims; however, most of it revolves round
the lack of any yardstick against which to measure the accuracy of
any results. Furthermore, since most estimates belong to different
time periods and are recorded in different units of measurement it
is extremely difficult to make meaningful empirical comparisons
between  the results. It is therefore the purpose of this article to
appraise the methods  of analysis which  can be used  and to see
which  differences have any bearing on the quantitative results so
that conclusions  can be  drawn  on  the most  profitable line of
further advance.
  * I am grateful for the helpful comments of John Black, John Kay, Frank Oliver, Paul
Richards and the SSRC International Economics Study Group on earlier versions of this
paper.

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