Skip to content

Advertisement

  • Open Access

The Sources and Magnitudes of Switzerland’s Gains from Trade

Swiss Journal of Economics and Statistics2016152:BF03399420

https://doi.org/10.1007/BF03399420

  • Published:

Summary

This paper uses the modern workhorse model of quantitative trade theory (Eaton and Kortum, 2002) as a measurement tool to quantify Switzerland’s gains from trade. I find that individual trading partners matter surprisingly little for Switzerland’s welfare because of reallocation effects: if trade between Switzerland and some partner country is inhibited, other supplier countries step into the breach so that the losses are limited and typically amount to less than 1 %. The conclusions are different if one considers groups of countries such as for example the EU: participating in a multilateral 25 % trade cost reduction increases Swiss welfare by 11 % relative to the status quo. However, it must also be noted that in the case of non-participation, the actual welfare losses relative to the status quo are modest with less than 1 %.

Keywords

  • Gains from trade
  • Switzerland
  • development accounting

Notes

Advertisement