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Trade Liberalization Strategies

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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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Keywords: Baltics; Economic models; cefta; trade area; free trade; free trade area; regional trade; trade agreements; trade liberalization; bilateral trade; central european free trade area; intraregional trade; trade agreement; trade flows; trade integration; free-trade area; regional trade integration; international trade; preferential trade; industry trade; bilateral agreements; export growth; world economy; multilateral approach; regional integration; preferential trade agreements; regional trade agreements; trade performance; trade arrangements; trade data; tariff lines; trade reform; regional trade liberalization; preferential access; liberalized trade; trade barriers; trade patterns; regional trade arrangements; trade relationships; export performance; tariff rates; increased trade; economic cooperation; trade preferences; foreign trade; preferential trade agreement; trading partner; economic integration; trade restrictions; trading patterns; political economy; free trade agreement; tariff liberalization; international financial; trade regimes; international financial markets; trade theories; quota-free access; partner countries; liberalization efforts; foreign trade policies; transition economies; world trade organization; capital markets; trade theory; world prices; factor endowments; bilateral flows; protected items; multilateral agreement; tariff reductions; world trade; bilateral trade flows; bilateral agreement; bilateral trade data; tariff schedules; export markets; trade policy reform; trading partners; international finance; protected goods; liberalizing trade; financial markets; trade advantages; importing country; negotiation process;

References

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  1. 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).
  2. repec:fth:michin:382 is not listed on IDEAS
  3. Laszlo Matyas, 1997. "Proper Econometric Specification of the Gravity Model," The World Economy, Wiley Blackwell, Wiley Blackwell, vol. 20(3), pages 363-368, 05.
  4. 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, CEPR;CES;MSH, vol. 12(24), pages 125-176, 04.
  5. 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, Elsevier, vol. 61(1), pages 23-42, March.
  6. Matthew McQueen, 2002. "The EU's Free-trade Agreements with Developing Countries: A Case of Wishful Thinking?," The World Economy, Wiley Blackwell, Wiley Blackwell, vol. 25(9), pages 1369-1385, 09.
  7. Choi, E. Kwan, 2003. "Trade and the Adoption of a Universal Language," Staff General Research Papers, Iowa State University, Department of Economics 10226, Iowa State University, Department of Economics.
  8. Alan Deardorff, 1998. "Determinants of Bilateral Trade: Does Gravity Work in a Neoclassical World?," NBER Chapters, National Bureau of Economic Research, Inc, in: The Regionalization of the World Economy, pages 7-32 National Bureau of Economic Research, Inc.
  9. David Hummels & James Levinsohn, 1993. "Monopolistic Competition and International Trade: Reconsidering the Evidence," NBER Working Papers 4389, National Bureau of Economic Research, Inc.
  10. Deardoff, A.V., 1995. "Determinants of Bilateral Trade: Does Gravity Work in a Neoclassical World?," Working Papers, Research Seminar in International Economics, University of Michigan 382, Research Seminar in International Economics, University of Michigan.
  11. Egger, Peter, 2000. "A note on the proper econometric specification of the gravity equation," Economics Letters, Elsevier, Elsevier, vol. 66(1), pages 25-31, January.
  12. Levy, Philip I, 1997. "A Political-Economic Analysis of Free-Trade Agreements," American Economic Review, American Economic Association, American Economic Association, vol. 87(4), pages 506-19, September.
  13. Edward Christie, 2001. "Potential Trade in Southeast Europe: A Gravity Model Approach," wiiw Balkan Observatory Working Papers, The Vienna Institute for International Economic Studies, wiiw 11, The Vienna Institute for International Economic Studies, wiiw.
  14. Baldwin, Richard, 1993. "A Domino Theory of Regionalism," CEPR Discussion Papers, C.E.P.R. Discussion Papers 857, C.E.P.R. Discussion Papers.
  15. 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.
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Citations

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Cited by:
  1. Predrag Bjelic, 2005. "Trade policy of the European Union as a factor of regional trade in Southeast Europe," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 23374, London School of Economics and Political Science, LSE Library.
  2. Cipollina, Maria & Salvatici, Luca, 2007. "Reciprocal trade agreements in gravity models: a meta-analysis," Economics & Statistics Discussion Papers esdp07035, University of Molise, Dept. EGSeI.
  3. World Bank, 2005. "Bosnia and Herzegovina : Country Economic Memorandum," World Bank Other Operational Studies 8676, The World Bank.
  4. Cipollina, Maria & Salvatici, Luca, 2007. "EU and developing countries: an analysis of preferential margins on agricultural trade flows," Working Papers, TRADEAG - Agricultural Trade Agreements 7219, TRADEAG - Agricultural Trade Agreements.
  5. World Bank, 2004. "Serbia and Montenegro : An Agenda for Economic Growth and Employment," World Bank Other Operational Studies 14487, The World Bank.
  6. Cardamone, Paola, 2007. "A survey of the assessments of the effectiveness of Preferential Trade Agreements using gravity models," Working Papers, TRADEAG - Agricultural Trade Agreements 7282, TRADEAG - Agricultural Trade Agreements.
  7. repec:wii:bpaper:bowp:070 is not listed on IDEAS
  8. 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, Prague Development Center, vol. 6(3), pages 71-74, October.
  9. 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, ISTAT - Italian National Institute of Statistics - (Rome, ITALY) 52, ISTAT - Italian National Institute of Statistics - (Rome, ITALY).
  10. Julia Spies & Helena Marques, 2006. "Trade Effects of the Europe Agreements," Diskussionspapiere aus dem Institut für Volkswirtschaftslehre der Universität Hohenheim, Department of Economics, University of Hohenheim, Germany 274/2006, Department of Economics, University of Hohenheim, Germany.
  11. Agustin Carstens, 2004. "Making Regional Economic Integration Work," The Pakistan Development Review, Pakistan Institute of Development Economics, Pakistan Institute of Development Economics, vol. 43(4), pages 335-352.
  12. Ivan Savin & Peter Winker, 2009. "Forecasting Russian Foreign Trade Comparative Advantages in the Context of a Potential WTO Accession," MAGKS Papers on Economics, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung) 200914, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  13. 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.
  14. Andrzej Cieślik & Jan Hagemejer, 2011. "The Effectiveness of Preferential Trade Liberalization in Central and Eastern Europe," Working Papers, Faculty of Economic Sciences, University of Warsaw 2011-21, Faculty of Economic Sciences, University of Warsaw.
  15. Alessia Amighini & Stefano Chiarlone, 2005. "New comparative advantages in the Central and Eastern European countries," LIUC Papers in Economics, Cattaneo University (LIUC) 182, Cattaneo University (LIUC).
  16. Libman, Alexander, 2008. "Federalism and regionalism in transition countries: A survey," MPRA Paper 29196, University Library of Munich, Germany.
  17. 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, ISTAT - Italian National Institute of Statistics - (Rome, ITALY) 79, ISTAT - Italian National Institute of Statistics - (Rome, ITALY).

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