Regionalism and the Rest of the World: Theory and Estimates of the Effects of European Integration.

There are no satisfactory ex post estimates of the effects of regional integration on excluded countries' welfare. Using a formal decomposition of welfare, this paper discusses the factors that might affect these countries' welfare and aspects of their measurement. It then surveys various ex ante estimates of the effects of European integration. These suggest that neighboring countries linked tightly to the European economy could lose significantly from the latter's integration, but that for other countries the losses are likely to be very small. Copyright 1997 by Blackwell Publishing Ltd.