DP1316 Regionalism and the Rest of the World: The Irrelevance of the Kemp-Wan Theorem

Author(s): L. Alan Winters
Publication Date: January 1996
Keyword(s): Kemp-Wan Theorem, Regional Integration, Terms of Trade
JEL(s): F13, F15
Programme Areas: International Trade and Regional Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=1316

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.