EU, NAFTA, and Asian Responses: A Perspective from the Calculus of Participation

40 Pages Posted: 14 Jul 2000 Last revised: 22 Jul 2022

See all articles by Junichi Goto

Junichi Goto

Kobe University

Koichi Hamada

Yale University - Department of Economics

Date Written: October 1995

Abstract

This paper assesses the economic conditions for Asian countries to cope with the formation of EU and NAFTA. Is it desirable for them to form their own trading area? And, if desirable, is it better to have a closed one like the EAEC or a more open one like the APEC? Relying on public economics and the calculus of participation combined with the Dixit-Stiglitz-Krugman framework, we find the following: (i) the development of the EAEC by the leadership of Malaysia would be a natural response of Asian countries against two big blocs in the world, EU and NAFTA; (ii) it is natural for the United States to discourage this move because the formation of an economic bloc in Asia will have a negative economic impact on the non- Asian countries; (iii) it is natural for the U.S. to propose an opposing coalition like the APEC to nullify the possible economic impact of the EAEC; but (iv) perhaps the APEC will be a good roundabout way towards international free trade.

Suggested Citation

Goto, Junichi and Hamada, Koichi, EU, NAFTA, and Asian Responses: A Perspective from the Calculus of Participation (October 1995). NBER Working Paper No. w5325, Available at SSRN: https://ssrn.com/abstract=225389

Junichi Goto (Contact Author)

Kobe University ( email )

2-1, Rokkodai-cho, Nada-ku
Kobe, 657-8501, 657-8501
Japan
81-78-803-0398 (Phone)
81-78-861-6434 (Fax)

Koichi Hamada

Yale University - Department of Economics ( email )

28 Hillhouse Ave
New Haven, CT 06520-8268
United States

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