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

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31/01/1996

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Abstract

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.