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Hub-and-Spoke or else? Free trade agreements in the 'enlarged' European Union Author info | Abstract | Publisher info | Download info | Related research | Statistics Luca De Benedictis
Roberta De Santis
Claudio Vicarelli
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The object of this paper is to estimate if and how the Central European Free Trade Agreement (CEFTA) and the Baltic Free Trade Agreement (BFTA) exerted a significant impact on intra-European trade, effectively reducing the influence of the European Association Agreements (EAs) in shaping the European trade structure as a hub-and-spoke system - with the EU15 being the hub and the CEECs the spoke. This paper analyses bilateral trade flows between eight CEECs and EU-23. We estimate a gravity equation using a system GMM dynamic panel data approach. Results support the assumptions that gravity forces and "persistence effects" matter. With respect to the effect of free trade agreements, evidence is found that Free trade agreements between CEECs matter: There is evidence that the presence of intra-periphery agreements helped expand intra-periphery trade and limited the emergence of a "hub-and-spoke" relationship between CEECs and EU. This results have important policy implications for the trade strategy of "future" EU members of the Southeastern European Countries as well as of the Southern Mediterranean Countries. According to the empirical results, these countries should move towards a regional free-trade area as exemplified by the CEFTA and the BFTA to avoid "hub-and-spoke" effects.
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Article provided by Cattaneo University (LIUC) in its journal The European Journal of Comparative Economics .
Volume (Year): 2 (2005)
Issue (Month): 2 (December)
Pages: 245-260
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Handle: RePEc:liu:liucej:v:2:y:2005:i:2:p:245-260Contact details of provider: Postal: Corso Matteotti 22 - Castellanza (VA) 21053 Phone: +39 (0)331-572 1 Fax: +39 (0)331-572 320 Email: Web page: http://eaces.liuc.it/default.asp More information through EDIRC
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Keywords: Trade flows ; regional integration ; EU eastward enlargement ; gravity model ; dynamic panel data ; Other versions of this item:
Find related papers by JEL classification: C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Estimation F15 - International Economics - - Trade - - - Economic Integration F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
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references Cited by : (explanations , Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.)
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repec:bep:glecon:7:2007:4:4 is not listed on IDEAS
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