Working Paper: CEPR ID: DP110
Authors: L. Alan Winters
Abstract: This paper surveys four ex-post quantitative studies of the effect of United Kingdom accession to the European Economic Countries on trade in manufactures. It starts by discussing the principal predictions of economic theory, establishing a framework for measuring integration effects, and sketching the approaches used to study integration effects within the EEC. It then examines the four United Kingdom studies, showing the wide range of approaches and results. It concludes that British imports had risen on account of integration by around 8 billion pound sterling by 1979, almost all of which was trade creation. British exports of manufactures rose by 3 billion pound sterling, a 4.5 billion pound sterling increase to the EEC being offset by a loss of 1.5 billion pound sterling elsewhere. The paper concludes by considering estimates of the welfare effects of accession. The changes in the consumption and production of manufactures were probably beneficial overall, but it must be admitted that, to date, economists have not applied best practice techniques to this question.
Keywords: EEC; customs union; economic integration; trade creation
JEL Codes: 420
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| UK accession to the EEC (F15) | increased imports from EEC countries (F15) |
| UK accession to the EEC (F15) | trade creation (F14) |
| increased imports from EEC countries (F15) | displacement of domestic goods (F18) |
| UK accession to the EEC (F15) | worsened Britain's trade balance in manufactures (N63) |
| worsened Britain's trade balance in manufactures (N63) | compensatory shifts in macroeconomic policy (E63) |
| increased deficit in manufactures (H62) | offset by surpluses in other sectors (H62) |