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Journal of Economic Integration 2014 September;29(3) :430-449.
DOI: https://doi.org/10.11130/jei.2014.29.3.430
Small States, Micro States, and their International Negotiation and Migration
Maurice Schiff 
IZA-Institute for the Study of Labor, Washington DC, USA
Corresponding Author: Maurice Schiff ,Tel: +202 338879, Email: schiffmaurice@yahoo.com
Copyright ©2014 Journal of Economic Integration
ABSTRACT
Due to low bargaining power and scarce resources, small developing states face severe disadvantages in international negotiations and may benefit from bloc formation and intra-bloc migration. Policies are examined in a model where a bloc’s size and welfare impact are determined by international and regional negotiation costs, bargaining power, accession rule, and intra-bloc migration. The main findings are: (i) bloc formation likelihood, size, and benefit increase with international negotiation costs; (ii) intra-bloc migration acts as a public good, raising regional benefits; (iii) bloc size is optimal in the presence of accession fees; (iv) intra-bloc migration and North-South trade are complements under negotiations for increased market access. Thus, even if trading identical goods, small neighboring states should consider forming an international negotiating bloc and supporting intra-bloc migration.

JEL Classification
F11: Neoclassical Models of Trade
F15: Economic Integration
F22: International Migration
Keywords: Small States | International Negotiations | Regional Cooperation | South-South Migration | Bloc Size | Welfare
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