DP110 Britain in Europe: A Survey of Quantitative Trade Studies

Author(s): L. Alan Winters
Publication Date: June 1986
Keyword(s): Customs Union, EC, Economic Integration, Trade Creation
JEL(s): 421, 423
Programme Areas: International Trade and Regional Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=110

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.