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Small state regional cooperation, south-south and south-north migration, and international trade

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  • Schiff, Maurice

Abstract

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.

Suggested Citation

  • Schiff, Maurice, 2010. "Small state regional cooperation, south-south and south-north migration, and international trade," Policy Research Working Paper Series 5297, The World Bank.
    • Handle: RePEc:wbk:wbrwps:5297
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Trade and Regional Integration; Population Policies; Economic Theory&Research; Post Conflict Reconstruction; Regional Economic Development;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration

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