The role of EFTA in European economic integration

EFTA's establishment and evolution form an important part of the development of economic integration in Western Europe. This role of EFTA is surveyed from an economist's perspective in this Report. The Report starts with EFTA's development alongside the EC during its first thirty years and analyses the trade creation and diversion effects of the integration process in those times. It proceeds with looking at the more recent integration aspects of the 1990s, such as, participation in the EEA, the creation of trade agreements with the CEECs, and the emergence of a forceful multilateral trade institution out of GATT. Finally it discusses the role that a smaller EFTA could still play in the future, as a promoter of the basic concept of freee trade among nations. Throughout the Report, results from economic research in EFTA are used to illustrate the main points of the argument. Thus it also provides a glimpse of thirty years of research on economic issues of trade and integration carried out by the European Free Trade Association.