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Border Effects and European Integration

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  • Angela Cheptea

Abstract

A new method for measuring trade potential from border effects is developed and applied to manufactured trade between the old 15 European Union (EU) members and 12 Central and East European (CEE) economies. Border effects are estimated with a theoretically compatible trade specification and much larger trade potentials are obtained than usually predicted by standard trade potential models. Even after a decade of regional trade liberalization, the integration of CEE and EU economies is two to three times weaker than intra-EU integration, revealing a large potential for East--West European trade. Adjusting for the impact of borders on multilateral resistance, yields lower trade potentials, but considerably larger than the magnitudes obtained with traditional approaches. (JEL codes: F10; F12; F14; F15) Copyright The Author 2012. Published by Oxford University Press on behalf of Ifo Institute for Economic Research, Munich. All rights reserved. For permissions, please email: journals.permissions@oup.com, Oxford University Press.

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  • Angela Cheptea, 2013. "Border Effects and European Integration," CESifo Economic Studies, CESifo, vol. 59(2), pages 277-305, June.
    • Handle: RePEc:oup:cesifo:v:59:y:2013:i:2:p:277-305
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    File URL: http://hdl.handle.net/10.1093/cesifo/ifs035
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    Cited by:

    1. Richard Frensch & Jan Hanousek & Evzen Kocenda, 2016. "Trade in Parts and Components across Europe," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 66(3), pages 236-262, June.
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    3. Mika, Alina, 2017. "Home sweet home: the home bias in trade in the European Union," Working Paper Series 2046, European Central Bank.
    4. Yener Kandogan, 2006. "Falling Walls and Lifting Curtains: Analysis of Border Effects in Transition Countries," William Davidson Institute Working Papers Series 821, William Davidson Institute at the University of Michigan.
    5. Jürgen Jerger, 2013. "Institutionen und historische Grenzen," Working Papers 336, Leibniz Institut für Ost- und Südosteuropaforschung (Institute for East and Southeast European Studies).

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    More about this item

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration

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