Working Paper: CEPR ID: DP1576
Authors: Andre Sapir
Abstract: This paper uses a standard gravity equation to test the hypothesis of domino effects in Western Europe. The question being addressed is whether increased integration within the EC has impacted negatively on non-members and thereby prompted their application for EC membership. The paper finds that the EC?s Internal Market programme may have caused such an effect on EFTA member countries.
Keywords: gravity model; preferential trading arrangement
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 integration within the European Community (EC) (F15) | negative impact on non-member countries (EFTA) (F69) |
| negative impact on non-member countries (EFTA) (F69) | requests for EC membership (F36) |
| EC's actions (F36) | reduction of trade opportunities for EFTA countries (F15) |
| reduction of trade opportunities for EFTA countries (F15) | compelling them to seek EC membership (F15) |
| EC's internal market program (F36) | investment diversion in EFTA economies (F21) |
| EC integration (F15) | decline in intra-EFTA trade intensity (F15) |