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A Gravity Model Forecast of the Potential Trade Effects of EU Enlargement: Lessons from 2004 and Path-dependency in Integration

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  • Christos Papazoglou
  • Eric J. Pentecost
  • Helena Marques

Abstract

This paper uses a gravity model to forecast the potential impact on trade balances and trade patterns of the 2004 EU enlargement. The results suggest that gross trade creation for the accession economies is about 25 per cent of their 2003 trade. Although membership of the EU creates trade it also results in trade diversion; that is, a declining share of accession country exports and imports with non-EU15 countries. Overall, the trade balances of the accession countries suffer larger trade deficits after accession due to import growth surpassing export growth. The extent of increase in the trade deficit due to accession is inversely related to the level of integration and income of the new members. Hence integration is path-dependent and the EU should take this into account when preparing for further enlargements to the Balkans and Southeast Europe. Copyright 2006 The Authors Journal compilation 2006 Blackwell Publishing Ltd. .

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Bibliographic Info

Article provided by Wiley Blackwell in its journal World Economy.

Volume (Year): 29 (2006)
Issue (Month): 8 (08)
Pages: 1077-1089

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Handle: RePEc:bla:worlde:v:29:y:2006:i:8:p:1077-1089

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Cited by:
  1. Fuchs, Michaela & Wohlrabe, Klaus, 2008. "Institutions, trade, and integration: what can be expected within the enlarged EU?," Dresden Discussion Paper Series in Economics 16/08, Dresden University of Technology, Faculty of Business and Economics, Department of Economics.
  2. Angela Cheptea, 2010. "Border Effects and East-West Integration," Working Papers SMART - LERECO 10-15, INRA UMR SMART.
  3. Andreas Breitenfellner & Jesus Crespo Cuaresma & Peter Mooslechner & Doris Ritzberger-Grünwald, 2008. "The Impact of EU Enlargement in 2004 and 2007 on FDI and Migration Flows Gravity Analysis of Factor Mobility," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 2, pages 101–120.
  4. Cipollina, Maria & Salvatici, Luca, 2007. "Reciprocal trade agreements in gravity models: a meta-analysis," Economics & Statistics Discussion Papers esdp07035, University of Molise, Dept. EGSeI.
  5. Angela Cheptea, 2013. "Border Effects and European Integration," CESifo Economic Studies, CESifo, vol. 59(2), pages 277-305, June.
  6. Karolien De Bruyne & Jan Van Hove, 2013. "The impact of European enlargement on the direction and prospects of Brussels exports," International Journal of Public Policy, Inderscience Enterprises Ltd, vol. 9(3), pages 188-214.
  7. Chevassus-Lozza, Emmanuelle & Latouche, Karine & Majkovic, Darja, 2007. "How Much do Non-Tariff Measures Explain the Border Effect at Entry to the EU Market? The CEECs Agri-Food Exports to EU in the Pre-Accession Period," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon TN 9852, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  8. Cardamone, Paola, 2007. "A Survey of the Assessments of the Effectiveness of Preferential Trade Agreements using Gravity Models," Economia Internazionale / International Economics, Camera di Commercio di Genova, vol. 60(4), pages 421-473.
  9. Pascal Ghazalian, 2013. "MERCOSUR enlargement: predicting the effects on trade in primary agricultural commodities," Economic Change and Restructuring, Springer, vol. 46(3), pages 277-297, August.
  10. Helena Marques, 2008. "Asymmetries in Heterogeneous Integrated Areas: Evidence from Intra-EU Sectoral Trade," Working Papers 2008.2, International Network for Economic Research - INFER.
  11. Sayeeda Bano, 2010. "ASEAN-New Zealand Trade Relations and Trade Potential," Working Papers in Economics 10/01, University of Waikato, Department of Economics.
  12. Marie Stack & Eric Pentecost, 2011. "A Gravity Model Approach to Estimating Prospective Trade Gains in the EU Accession and Associated Countries," Working Papers 2010/11, Nottingham Trent University, Nottingham Business School, Economics Division.
  13. Chevassus-Lozza, Emmanuelle & Latouche, Karine & Majkovic, Darja & Unguru, Manuela, 2008. "The importance of EU-15 borders for CEECs agri-food exports: The role of tariffs and non-tariff measures in the pre-accession period," Food Policy, Elsevier, vol. 33(6), pages 595-606, December.
  14. Groizard, José Luis & Marques, Helena & Gallego Santana, Maria, 2014. "Islands in trade: Disentangling distance from border effects," Economics Discussion Papers 2014-27, Kiel Institute for the World Economy.

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