By Scott Bradford and Robert Z. Lawrence , Institute for International Economics, February 2004

The authors use the underlying data from purchasing power parity surveys to estimate the potential benefits from fully integrating goods markets among major OECD countries. These data are particularly useful because they are comprehensive, and every effort has been made to ensure that they are comparable. Input-output tables are used to eliminate distribution margins from final goods prices and thereby provide estimates of ex-factory prices. Price differentials have been taken as measures of barriers, and the welfare effects of eliminating these barriers have been estimated in a general equilibrium model.

The study also provides insights into the relative openness of individual OECD countries to the world economy and the degree to which Europe has become a single market.

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Book Contents:

Full-text PDF versions of each chapter can be accessed below by clicking on the desired chapter title.

Preface

Acknowledgments

1. Introduction

2. Measuring Barriers and the Benefits of Integration: Existing Studies

3. Fragmentation Among OECD Countries

4. The Welfare Effects of Integration

References

Index

Book Description:

How important are the remaining barriers to integration in international goods markets and how would eliminating them affect global and individual countries’ welfare? Major current initiatives, such as multilateral trade liberalization in the Doha Round and the efforts to complete the European Common Market, imply that additional integration is highly desirable, while the widespread use of the term "globalization" to describe our era suggests that it is already almost complete.

Has Globalization Gone Far Enough: The Cost of Fragmented Markets studies these questions using the most comprehensive price data available. The authors, Scott C. Bradford and Robert Z. Lawrence find that there is considerable international market fragmentation among industrial countries—this, firms charging different prices for similar productions in different national markets—even among countries with low tariff barriers.

Bradford and Lawrence estimate that integration among the eight countries in their sample—Australia, Canada, Germany, Italy, Japan, the Netherlands, the United Kingdom and the Untied States—would raise global GDP by more than $500 billion. This would increase the size of the world economy by over 2 percent. Remarkably, almost half the global gain in these eight countries could be reaped if Japan alone eliminated its international fragmentation.

About the Author:

Scott C. Bradford is an assistant professor at the department of economics, Brigham Young University. His reseach interests include international trade, political economy, and the Japanese economy. His work has appeared in the American Economics Review, The Review of Economics and Statistics and the Journal of International Economics.

Robert Z. Lawrence, Senior Fellow, is the Albert L. Williams Professor of Trade and Investment at the John F. Kennedy School of Government at Harvard University. He was appointed by President Clinton to serve as a Member of his Council of Economic Advisers in 1999. He held the New Century Chair as a nonresident senior fellow at the Brookings Institution, and founded and edited the Brookings Trade Forum. Dr. Lawrence has been a senior fellow in the Economic Studies Program at Brookings (1983-91), a professorial lecturer at the Johns Hopkins School of Advanced International Studies (1978-81), and an instructor at Yale University (1975). He has served as a consultant to the Federal Reserve Bank of New York, the World Bank, the OECD, and UNCTAD. He is the author of more than 100 papers and articles on topics in the field of international economics, particularly on global integration, trade in the Middle East, and the impact of trade on the labor market. He is also the author of several books, including Globaphobia: Confronting Fears about Open Trade (Brookings Institution Press; 1998).

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