A Gravity Model Approach to Estimating Prospective Trade Gains in the EU Accession and Associated Countries
AbstractExamining the trade prospects for the new European Union (EU) member states and the EU associated partner countries is an important issue in the context of European eastward enlargement and greater economic integration with its immediate neighbours. An out-ofsample approach to projecting trade volumes for twenty countries of interest is adopted using a gravity equation for a panel data set of bilateral export flows from twelve EU countries to twenty OECD trading partners over the 1992-2003 period. The potential trade volumes are calculated from a gravity model of new trade theory (NTT) determinants. The selected twenty countries’ prospects for further trade integration vis-à-vis the EU can be gauged by expressing the trade volume projections as a ratio of actual trade volumes for each pair of countries. The projected trade ratios for the ten new member states are found to be multiples of actual 2003 levels, indicating that trade expansion looks set to continue. Near unity values, however, are more frequent among the Mediterranean countries, indicating fewer opportunities for further trade integration with the EU.
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Bibliographic InfoPaper provided by Nottingham Trent University, Nottingham Business School, Economics Division in its series Working Papers with number 2010/11.
Date of creation: Mar 2011
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Web page: http://www.ntu.ac.uk/nbs
Panel data; Gravity model; Trade integration;
Find related papers by JEL classification:
- F14 - International Economics - - Trade - - - Empirical Studies of Trade
- F15 - International Economics - - Trade - - - Economic Integration
- C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-04-23 (All new papers)
- NEP-EUR-2011-04-23 (Microeconomic European Issues)
- NEP-INT-2011-04-23 (International Trade)
- NEP-TRA-2011-04-23 (Transition Economics)
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