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Determinants of the Exports of Hungary: Trade Theory and the Gravity Model

Author

Listed:
  • László Erdey

    (Department of World Economy and International Relations, Faculty of Economics and Business, University of Debrecen)

  • Andrea Pöstényi

    (ExxonMobil, Hungary)

Abstract

The end of the Communist regime brought about great changes in the economies of Central and Eastern Europe; the restructuring of foreign trade was one of the biggest challenges for these countries. After the transition period, Hungary became a very open country, with its trade to GDP ratio around 1.5, while trading with more than 190 countries. The aim of this paper is to analyse the determinants of exports between 1993–2014, with an emphasis on the impact of factor endowments. According to our results, economic size, common border, and free trade agreements had a statistically significant positive effect on exports, while the coefficient of distance had the expected negative sign. We measured factor endowments with several approaches and our results show that exports change in line with the Linder hypothesis, i.e. Hungary tends to trade more with countries having similar factor endowments, and thus its trade is based on differentiated products.

Suggested Citation

  • László Erdey & Andrea Pöstényi, 2017. "Determinants of the Exports of Hungary: Trade Theory and the Gravity Model," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 67(1), pages 77-97, March.
    • Handle: RePEc:aka:aoecon:v:67:y:2017:i:1:p:77-97
    Note: The present paper is a significantly revised version in its empirical approach of our previous paper presented at the SSEM EuroConference, Budapest, July 6–8, 2014. The recommendations of the two anonymous referees are highly appreciated.
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    Citations

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    Cited by:

    1. Pitoňáková Renáta, 2019. "Modelling CAR Export from Slovakia to the United Kingdom - Vector Error Correction Approach," Review of Economic Perspectives, Sciendo, vol. 19(4), pages 249-264, December.
    2. Redwanur Rahman & Saleh Shahriar & Sokvibol Kea, 2019. "Determinants of Exports: A Gravity Model Analysis of the Bangladeshi Textile and Clothing Industries," FIIB Business Review, , vol. 8(3), pages 229-244, September.

    More about this item

    Keywords

    factor endowments; Heckscher-Ohlin model; Linder hypothesis; gravity model;
    All these keywords.

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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