Europe 1992 and the Western Pacific Economies

Abstract

The main stimulus to completing the integration of the economies of the European Community under the 1992 programme has been the EC's relatively slow economic growth during the past two or three decades. While Japan's share of world GDP has trebled since the early 1960s, to about one sixth, the EC 12's share has fallen slightly to around one quarter. Many expect - or at least hope - that the removal of remaining barriers to movements of goods, services, people and capital within the EC not only will provide a one-off boost to EC output (Cecchini et al. 1988) but will set EC incomes on a permanently higher growth path (Baldwin, 1989). Numerous non-Europeans worry, however, that the trade-diverting consequences of the EC reforms, together with possible enlargements of EC membership and changes in EC preferential trading arrangements, will be much more significant than any external trade creation and may make some excluded economies worse off. This paper seeks to assess the effects of the EC92 programme and related changes currently underway in Europe on the trade and growth prospects of a particularly vulnerable group, namely, the Western Pacific economies.