Economy Wide Effects of ECO Regional Integration in a Standard GE Closure

This study assesses the impacts of ECO regional integration on some important economic variables in Eco members'' countries. The role of regional trade agreements in increasing of exports and imports، welfare and improving of some other economic variables of regional economies has been the subject of economist’s debate. The existing empirical literature doesn’t have addressed this issue for ECO. This paper uses the global trade analysis project (GTAP) modeling approach to simulate the reduction of trade barriers among ECO members. In a standard GE closure، using a multi-region، multi-commodity GTAP approach، the simulation results show that trade policy reform will improve the ECO members'' economic performance، through greater exports and imports، output، lower import prices، higher endowment demand، higher consumption and greater utility and welfare. Decomposition of welfare changes shows that varying trade policy has different effects on ECO members'' welfare components.