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Journal of Economic Integration 2014 September;29(3) :430-449.
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:
Copyright ©2014 Journal of Economic Integration
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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