Working Paper: CEPR ID: DP1316
Authors: L. Alan Winters
Abstract: Many commentators purport to use the Kemp-Wan Theorem to discuss the effects of regional integration schemes on non-member countries, and to operationalize the theorem in terms of the share of member countries' imports from non-members. This paper shows that Kemp and Wan (1976) say nothing about changes in non-member welfare and that the latter is more closely related to non-members' imports than to their shares of members' markets. The paper suggests that a new approach to this issue is required.
Keywords: regional integration; Kemp-Wan theorem; terms of trade
JEL Codes: F13; F15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Increased non-member exports to member countries (F10) | Decreased non-member welfare (D69) |
| Non-member imports (F10) | Non-member welfare (I39) |
| Terms of trade (F14) | Non-member welfare (I39) |