Working Paper: CEPR ID: DP836
Authors: L. Alan Winters; Zhen Kun Wang
Abstract: We present a simple computable model of EC footwear production and trade coupled with a rudimentary production model for Eastern Europe. We simulate the liberalization of EC footwear imports from Eastern Europe as planned under the so-called Europe Agreements. We find that if Eastern Europe can improve its productivity modestly both East and West can gain significantly from liberalization. These gains are concentrated on the EC-North, however, while the major footwear producing areas of the EC lose. The benefits of liberalization to Eastern Europe do not depend strongly on their gaining preferential access to the EC -- they persist even if all suppliers to the EC have free access.
Keywords: EC; Eastern Europe; Europe Agreements; Quantitative Restrictions; Trade Liberalization; Footwear
JEL Codes: F13; F15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Eastern European productivity improvement (O52) | Eastern European exports to EC (F14) |
| Abolition of QRS (C22) | Eastern European exports to EC (F14) |
| Abolition of QRS (C22) | Total Eastern European output of footwear (L67) |
| Abolition of QRS (C22) | Employment in Eastern European footwear sector (L67) |
| Abolition of QRS (C22) | Wages in Eastern European footwear sector (J31) |
| Full preferences (D01) | Eastern European share of EC market (P23) |
| 20% productivity increase with constant costs (D24) | Eastern European share of EC market (P23) |