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Hub-and-Spoke or else? Free trade agreements in the “enlarged” European Union

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Author Info
Luca De Benedictis (DIEF – Dipartimento di Istituzioni Economiche e Finanziarie, University of Macerata, Italy)
Roberta De Santis (ISAE - Institute for Studies and Economic Analyses)
Claudio Vicarelli (ISAE - Institute for Studies and Economic Analyses)

Additional information is available for the following registered author(s):

Abstract

The object of this paper is to estimate the effect of European Union eastwards enlargement process on trade patterns in the Union. In particular, we intend to investigate whether and how the EU Free trade agreements with CEECs have exerted a different impact on centre-periphery and intra-periphery trade relationships. 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 EU countries and CEECs matter. However there is also evidence that the presence of intra-periphery agreements helped expand intra-periphery trade and limit the emergence of a “hub-andspoke” 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 BAFTA to avoid “hub-and-spoke” effects.

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Publisher Info
Paper provided by ISAE - Institute for Studies and Economic Analyses - (Rome, ITALY) in its series ISAE Working Papers with number 52.

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Length: 30 pages
Date of creation: Jun 2005
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Handle: RePEc:isa:wpaper:52

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Related research
Keywords: Trade Flows; regional integration; EU eastwards enlargment; gravity models; Dynamic Panel data;

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Find related papers by JEL classification:
F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
F15 - International Economics - - Trade - - - Economic Integration
C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Estimation
C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data

References listed on IDEAS
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  7. Joze P. Damijan & Igor Masten, 2002. "Time-Dependent Efficiency of Free Trade Agreements: The Case of Slovenia and the CEFTA Agreement," LICOS Discussion Papers 11702, LICOS - Centre for Institutions and Economic Performance, K.U.Leuven. [Downloadable!]
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Full 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.)

  1. Deltas, George & Desmet, Klaus & Facchini, Giovanni, 2006. "Hub-and-Spoke Free Trade Areas," CEPR Discussion Papers 5960, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  2. Vicarelli, Claudio & De Santis, Roberta & De Nardis, Sergio, 2008. "The Single Currency's Effects on Eurozone Sectoral Trade: Winners and Losers?," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy, vol. 2(17), pages 1-34. [Downloadable!]
    Other versions:
  3. 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, ISAE - Institute for Studies and Economic Analyses - (Rome, ITALY). [Downloadable!]
  4. 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. [Downloadable!]
  5. repec:bep:glecon:7:2007:4:4 is not listed on IDEAS
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