Small State Regional Cooperation, South-South and South-North Migration, and International Trade
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This paper provides a different basis
than previous analyses for regional bloc formation and
regional migration. Due to low bargaining power and fixed
costs, small states face a severe disadvantage in
negotiations with the rest of the world and might benefit by
forming a regional bloc. The study a) presents a general
equilibrium model where bargaining power, international and
regional negotiation costs, number of issues negotiated, and
accession rule to the bloc determine its size and welfare
impact; and b) examines the impact of international
migration as well as the migration-trade relationship. The
main findings are: i) the likelihood of regional bloc
formation, its size and welfare impact, increases with
international negotiation costs and the number of issues
negotiated, and decreases with regional negotiation costs;
ii) bloc size is optimal (below the optimum) if an accession
fee is (is not) charged; iii) South-South migration raises
bloc size and welfare; iv) South-South migration and trade
are complements under market access negotiations and are
substitutes under negotiations for unilateral transfers as
well as under migrant remittances; and v) South-North
migration and bloc formation, and South-North and
South-South migration, are substitutes for the states that
benefit from membership in the bloc.
Palabras clave
BARGAINING POWER, BENCHMARK, BLOC MEMBERS, BLOC SIZE, BRAIN DRAIN, CAPITAL FLOWS, CARIBBEAN REGION, COLLECTIVE ACTION, COMMODITY TRADE, COMMON PROPERTY, CONSTANT RETURNS TO SCALE, CONSTRAINT, CONSUMER GOODS, COUNTRY OF ORIGIN, DEVELOPMENT ECONOMICS, ECONOMIC INTEGRATION, EQUILIBRIUM, EQUILIBRIUM MODEL, EXCESS SUPPLY, EXPORTS, EXTERNALITY, FIXED COSTS, FOREIGN DIRECT INVESTMENT, FREE ENTRY, FREE TRADE, FREE TRADE AGREEMENTS, GDP, GEOGRAPHIC PROXIMITY, GEOGRAPHIC REGION, HOME COUNTRIES, IMMIGRATION, IMPACT OF MIGRATION, INCOME SHARES, INTERNATIONAL AGREEMENTS, INTERNATIONAL ARENA, INTERNATIONAL BANK, INTERNATIONAL ECONOMICS, INTERNATIONAL MIGRATION, INTERNATIONAL NEGOTIATION, INTERNATIONAL NEGOTIATIONS, INTERNATIONAL ORGANIZATIONS, INTERNATIONAL POSITIONS, INTERNATIONAL TRADE, LABOR FORCE, LDCS, M1, M2, MARGINAL BENEFIT, MARGINAL IMPACT, MARKET ACCESS, MARKET DISTORTIONS, MARKET SHARE, MEMBER COUNTRIES, MEMBER STATE, MEMBER STATES, MIGRANT, MIGRANTS, MIGRATION, NATIONALS, NATIONS, NEGATIVE EXTERNALITY, NEGOTIATION, NEGOTIATION COSTS, NEGOTIATION RESOURCES, OPPORTUNITY COST, PARTIAL EQUILIBRIUM ANALYSIS, PERFECT COMPETITION, POLICY RESEARCH, POLICY RESEARCH WORKING PAPER, POLITICAL ECONOMY, PREFERENTIAL AGREEMENTS, PREFERENTIAL TRADE, PREFERENTIAL TRADE AGREEMENTS, PROGRESS, RECONSTRUCTION, REGIONAL AGREEMENTS, REGIONAL BLOC, REGIONAL BLOC FORMATION, REGIONAL BLOCS, REGIONAL CONTRADICTIONS, REGIONAL COOPERATION, REGIONAL COST, REGIONAL COSTS, REGIONAL GROUPINGS, REGIONAL INTEGRATION, REGIONAL MIGRATION, REGIONAL SOLUTIONS, REGIONAL TRADE, REGIONAL TRADE AGREEMENT, REGIONAL WELFARE, REGIONALISM, REMITTANCES, RESPECT, TRADE AGREEMENT, TRADE BARRIERS, TRADE BLOC, TRADE BLOCS, TRADE EXPANSION, TRADE LIBERALIZATION, TRADE POLICY, TRADE RELATIONSHIP, TRADING PARTNERS, TREATY, VIRGIN, WAGE DIFFERENTIALS, WAGES, WAR, WELFARE IMPLICATIONS, WTO