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European Trade Integration in the Baltic Sea Region - A Gravity Model Based Analysis

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  • Paas, Tiiu
  • Tafenau, Egle

Abstract

The paper explores regional trade integration of the countries involved in the EU eastward enlargement (EU-25) processes distinguishing the possible regional trade clusters within EU-25 that may support integration of the EU-15 and the new member states. We examine whether the gravity equation based on the new trade theory describes trade integration of the EU-25 countries, and whether the results of a gravity model based analysis may be different in the case of the Baltic Sea region (BSR). The gravity models are estimated based on panel data for the years 1993 to 2002. The results of our analysis indicate that the BSR is forming an exception within EU-25. The BSR trade cannot be explained as much with New Trade Theories as in the case of the whole EU. The BSR countries have different factor endowments and the intensive trade relations between the BSR countries are mainly based on comparative advantages.

Suggested Citation

  • Paas, Tiiu & Tafenau, Egle, 2005. "European Trade Integration in the Baltic Sea Region - A Gravity Model Based Analysis," Discussion Paper Series 26263, Hamburg Institute of International Economics.
    • Handle: RePEc:ags:hwwadp:26263
    DOI: 10.22004/ag.econ.26263
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    Cited by:

    1. Robert Price & Andreas Wörgötter, 2011. "Estonia: Making the Most of Globalisation," OECD Economics Department Working Papers 876, OECD Publishing.
    2. Kurtovic, Safet & Halili, Blerim & Maxhuni, Nehat, 2016. "Liberalization of Trade with Leading Trade Partners: Some Evidence from Bosnia and Herzegovina," MPRA Paper 75053, University Library of Munich, Germany, revised 04 Nov 2016.
    3. Liwiusz Wojciechowski, 2013. "The Determinants of FDI Flows from the EU-15 to the Visegrad Group Countries – A Panel Gravity Model Approach," Entrepreneurial Business and Economics Review, Centre for Strategic and International Entrepreneurship at the Cracow University of Economics., vol. 1(1), pages 7-22.
    4. Erginbay Ugurlu & Irena Jindrichovska, 2019. "Estimating Gravity Model in the Czech Republic: Empirical Study of Impact of IFRS on Czech International Trade," European Research Studies Journal, European Research Studies Journal, vol. 0(2), pages 265-281.
    5. Anna Garashchuk & Fernando Isla Castillo & Pablo Podadera Rivera, 2022. "The Empirical Evidence of EU–Russia Bilateral Trade under Sanctions and Oil Price Shocks," Sustainability, MDPI, vol. 14(13), pages 1-14, June.
    6. Darja Majkovic & Stefan Bojnec & Jernej Turk, 2007. "Development of New Members' EU Trade: Evidence from the Slovenian Agri-Food Sector," Post-Communist Economies, Taylor & Francis Journals, vol. 19(2), pages 209-223.

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    More about this item

    Keywords

    International Relations/Trade;

    JEL classification:

    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • F15 - International Economics - - Trade - - - Economic Integration
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics

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