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Ireland’s Trading Potential with Central and Eastern European Countries - A Gravity Study

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  • Marius Brülhart

    (University of Manchester)

  • Mary J. Kelly

    (Trinity College Dublin)

Abstract

Using a gravity model, we estimate the magnitude of potential trade flows between Ireland and the five CEEC countries which are currently negotiating accession to the EU. We find that Irish exports were already close to their “normal” level in 1994, but that imports from the CEECs were still less than half of their potential size. The value of estimated potential trade corresponds to 0.8 per cent of Irish GNP. The actual share in 1994 was 0.5 per cent. EU enlargement would raise Ireland-CEEC trade to 1.2 per cent of GNP. The short-term scope for trade expansion therefore appears to be modest. Stronger potential for trade growth emerges in the “long-term” scenario, which assumes partial income convergence of the EU and the CEECs. According to our upper-limit estimate in the convergence scenario, the value of Irish trade with the CEECs could reach 8.3 per cent of Irish GNP in 2020.

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Bibliographic Info

Article provided by Economic and Social Studies in its journal Economic and Social Review.

Volume (Year): 30 (1999)
Issue (Month): 2 ()
Pages: 159-174

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Handle: RePEc:eso:journl:v:30:y:1999:i:2:p:159-174

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  1. Feenstra, Robert & Markusen, James R. & Rose, Andrew K, 1998. "Understanding the Home Market Effect and the Gravity Equation: The Role of Differentiating Goods," CEPR Discussion Papers 2035, C.E.P.R. Discussion Papers.
  2. Jonathan Eaton & Samuel Kortum, 1997. "Technology and Bilateral Trade," Boston University - Institute for Economic Development 79, Boston University, Institute for Economic Development.
  3. Alan Deardorff, 1998. "Determinants of Bilateral Trade: Does Gravity Work in a Neoclassical World?," NBER Chapters, in: The Regionalization of the World Economy, pages 7-32 National Bureau of Economic Research, Inc.
  4. Dieter Schumacher, 1995. "Impact on German Trade of Increased Division of Labour with Eastern Europe," Discussion Papers of DIW Berlin 116, DIW Berlin, German Institute for Economic Research.
  5. Anderson, James E, 1979. "A Theoretical Foundation for the Gravity Equation," American Economic Review, American Economic Association, vol. 69(1), pages 106-16, March.
  6. Black,Stanley W., 2008. "Europe's Economy Looks East," Cambridge Books, Cambridge University Press, number 9780521088237.
  7. Gual, Jordi & Martín, Carmela, 1994. "Trade and Foreign Direct Investment with Central and Eastern Europe: Its Impact on Spain," CEPR Discussion Papers 1006, C.E.P.R. Discussion Papers.
  8. Vittas, H. & Mauro, P., 1995. "Potential Trade with Core and Periphery: Industry Differences in Trade Patterns," Papers 10, American Institute for Contemporary German Studies-.
  9. Greenaway, David & Nam, Chong Hyun, 1988. "Industrialisation and Macroeconomic Performance in Developing Countries under Alternative Trade Strategies," Kyklos, Wiley Blackwell, vol. 41(3), pages 419-35.
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Cited by:
  1. Yeboah, Osei-Agyeman & Shaik, Saleem & Wozniak, Shawn J. & Allen, Albert J., 2008. "Increased Cocoa Bean Exports under Trade Liberalization: A Gravity Model Approach," 2008 Annual Meeting, February 2-6, 2008, Dallas, Texas 6819, Southern Agricultural Economics Association.
  2. Maria Paula Fontoura & Enrique Martínez-Galán & Isabel Proença, 2006. "Trade Potential in an Enlarged European Union: A Recent Approach," Working Papers Department of Economics 2006/08, ISEG - School of Economics and Management, Department of Economics, University of Lisbon.
  3. Yeboah, Osei-Agyeman & Shaik, Saleem & Wozniak, Shawn J. & Allen, Albert J., 2011. "Does the WTO Increase Trade? The Case of U.S. Cocoa Imports from WTO-Member Producing Countries," Journal of Food Distribution Research, Food Distribution Research Society, vol. 42(2), July.
  4. A. Porojan, 2001. "Trade Flows and Spatial Effects: The Gravity Model Revisited," Open Economies Review, Springer, vol. 12(3), pages 265-280, July.
  5. repec:wii:bpaper:bowp:070 is not listed on IDEAS
  6. Marques, Helena, 2002. "Trade Similarities between Eastern and Southern Europe: Opportunities or Competition?," Estey Centre Journal of International Law and Trade Policy, Estey Centre for Law and Economics in International Trade, vol. 3(2).

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