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Trade Liberalization Strategies: What Could South Eastern Europe Learn From CEFTA and BFTA?

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Author Info

  • Antonis Adam
  • James McHugh
  • Theodora Kosma

Abstract

This paper explores the effectiveness of the Central European Free Trade Area (CEFTA) and the Baltic Free Trade Area (BFTA). Estimates from a gravity model and bilateral trade data support the view that both CEFTA and BFTA helped expand regional trade and limit the emergence of a "hub-and-spoke" relationship between the CEECs and the European Union (EU). These empirical conclusions carry some important policy implications for the "second wave" of prospective EU members among Southeastern European Countries (SEECs). The paper argues that the SEECs should reconsider their bilateral approach to trade liberalization and move towards a multilateral free-trade area as exemplified by both the CEFTA and BFTA.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 03/239.

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Length: 32
Date of creation: 01 Dec 2003
Date of revision:
Handle: RePEc:imf:imfwpa:03/239

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Related research

Keywords: Baltics; Economic models;

References

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  1. Richard Baldwin, 1993. "A Domino Theory of Regionalism," NBER Working Papers 4465, National Bureau of Economic Research, Inc.
  2. Laszlo Matyas, 1997. "Proper Econometric Specification of the Gravity Model," The World Economy, Wiley Blackwell, vol. 20(3), pages 363-368, 05.
  3. Egger, Peter, 2000. "A note on the proper econometric specification of the gravity equation," Economics Letters, Elsevier, vol. 66(1), pages 25-31, January.
  4. Polachek, Solomon W. & Kim, Moon-Kak, 1994. "Panel estimates of the gender earnings gap : Individual-specific intercept and individual-specific slope models," Journal of Econometrics, Elsevier, vol. 61(1), pages 23-42, March.
  5. Deardoff, A.V., 1995. "Determinants of Bilateral Trade: Does Gravity Work in a Neoclassical World?," Working Papers 382, Research Seminar in International Economics, University of Michigan.
  6. Matthew McQueen, 2002. "The EU's Free-trade Agreements with Developing Countries: A Case of Wishful Thinking?," The World Economy, Wiley Blackwell, vol. 25(9), pages 1369-1385, 09.
  7. Edward Christie, 2001. "Potential Trade in Southeast Europe: A Gravity Model Approach," The wiiw Balkan Observatory Working Papers 011, The Vienna Institute for International Economic Studies, wiiw.
  8. Hummels, D. & Levinsohn, J., 1993. "Monopolistic Competition and International Trade: Reconsidering the Evidence," Working Papers 339, Research Seminar in International Economics, University of Michigan.
  9. Antonis Adam & Thomas Moutos, 2002. "The Political Economy of EU Enlargement: Or, Why Japan is not a Candidate Country?," CESifo Working Paper Series 704, CESifo Group Munich.
  10. Choi, E. Kwan, 2003. "Trade and the Adoption of a Universal Language," Staff General Research Papers 10226, Iowa State University, Department of Economics.
  11. Alan V. Deardorff, 1995. "Determinants of Bilateral Trade: Does Gravity Work in a Neoclassical World?," NBER Working Papers 5377, National Bureau of Economic Research, Inc.
  12. Levy, Philip I, 1997. "A Political-Economic Analysis of Free-Trade Agreements," American Economic Review, American Economic Association, vol. 87(4), pages 506-19, September.
  13. Paas, Tiiu, 2002. "Gravity approach for exploring Baltic Sea regional integration in the field of international trade," HWWA Discussion Papers 180, Hamburg Institute of International Economics (HWWA).
  14. Richard E. Baldwin & Joseph F. Francois & Richard Portes, 1997. "The costs and benefits of eastern enlargement: the impact on the EU and central Europe," Economic Policy, CEPR & CES & MSH, vol. 12(24), pages 125-176, 04.
  15. repec:fth:michin:382 is not listed on IDEAS
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Citations

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Cited by:
  1. Ivan Savin & Peter Winker, 2009. "Forecasting Russian Foreign Trade Comparative Advantages in the Context of a Potential WTO Accession," Central European Journal of Economic Modelling and Econometrics, CEJEME, vol. 1(2), pages 111-138, November.
  2. Agustin Carstens, 2004. "Making Regional Economic Integration Work," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 43(4), pages 335-352.
  3. Maria Cipollina & Luca Salvatici, 2010. "Reciprocal Trade Agreements in Gravity Models: A Meta-Analysis," Review of International Economics, Wiley Blackwell, vol. 18(1), pages 63-80, 02.
  4. World Bank, 2005. "Bosnia and Herzegovina : Country Economic Memorandum," World Bank Other Operational Studies 8676, The World Bank.
  5. Luca De Benedictis & Roberta De Santis & Claudio Vicarelli, 2005. "Hub-and-Spoke or else? Free trade agreements in the “enlarged” European Union," ISAE Working Papers 52, ISTAT - Italian National Institute of Statistics - (Rome, ITALY).
  6. Roberta De Santis & Claudio Vicarelli, 2007. "The “deeper” and the “wider” EU strategies of trade integration.An empirical evaluation of EU Common Commercial Policy effects," ISAE Working Papers 79, ISTAT - Italian National Institute of Statistics - (Rome, ITALY).
  7. Libman, Alexander, 2008. "Federalism and regionalism in transition countries: A survey," MPRA Paper 29196, University Library of Munich, Germany.
  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. World Bank, 2004. "Serbia and Montenegro : An Agenda for Economic Growth and Employment," World Bank Other Operational Studies 14487, The World Bank.
  10. Nargiza Zufarova, 2010. "Eu Regional Trade Vulnerabilities, Liberalization And Potential Lessons For Uzbekistan Trade Reforms," Perspectives of Innovation in Economics and Business (PIEB), Prague Development Center, vol. 6(3), pages 71-74, October.
  11. Julia Spies & Helena Marques, 2006. "Trade Effects of the Europe Agreements," Diskussionspapiere aus dem Institut für Volkswirtschaftslehre der Universität Hohenheim 274/2006, Department of Economics, University of Hohenheim, Germany.
  12. Predrag Bjelic, 2005. "Trade policy of the European Union as a factor of regional trade in Southeast Europe," LSE Research Online Documents on Economics 23374, London School of Economics and Political Science, LSE Library.
  13. Alessia Amighini & Stefano Chiarlone, 2005. "New comparative advantages in the Central and Eastern European countries," LIUC Papers in Economics 182, Cattaneo University (LIUC).
  14. Antonis Adam & Thomas Moutos, 2005. "Turkish Delight for Some, Cold Turkey for Others?: The Effects of the EU-Turkey Customs Union," CESifo Working Paper Series 1550, CESifo Group Munich.
  15. Jože P. Damijan & José De Sousa & Olivier Lamotte, 2006. "The Effect of Trade Liberalization in South-Eastern European Countries," The wiiw Balkan Observatory Working Papers 070, The Vienna Institute for International Economic Studies, wiiw.
  16. Andrzej Cieślik & Jan Hagemejer, 2011. "The Effectiveness of Preferential Trade Liberalization in Central and Eastern Europe," Working Papers 2011-21, Faculty of Economic Sciences, University of Warsaw.
  17. Cipollina, Maria & Salvatici, Luca, 2007. "EU and developing countries: an analysis of preferential margins on agricultural trade flows," Working Papers 7219, TRADEAG - Agricultural Trade Agreements.

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