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Ireland's Trading Potential with Central and Eastern European Countries: A Gravity Study

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Author Info
Marius Brülhart
Mary Kelly

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Abstract

Using a gravity model, we estimate the magnitude of potential trade flows between Ireland and the five CEEC countries currently negotiating accession to the EU. We find that Irish exports were already close to their "normal" level in 1994, but that imports from the CEECs were still only half of their "normal" size. The value of estimated "normal" trade corresponds to 0.8 percent of Irish GNP. The actual share in 1994 was 0.5 percent. EU enlargement would raise Ireland-CEEC trade to 1.2 percent of GNP. The short-term scope for trade expansion therefore appears to be modest. Stronger potential for trade growth emerges in the "long-term" scenario, which assumes partial income convergence of the EU and the CEECs. According to our upper-limit estimate in the convergence scenario, the value of Irish trade with the CEECs could reach 7.7 percent of Irish GNP in 2020.

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Paper provided by Trinity College Dublin, Department of Economics in its series Economics Technical Papers with number 9815.

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Date of creation: 1998
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Handle: RePEc:tcd:tcduet:9815

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Find related papers by JEL classification:
F14 - International Economics - - Trade - - - Country and Industry Studies of Trade
F15 - International Economics - - Trade - - - Economic Integration
F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

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  1. Vittas, H. & Mauro, P., 1995. "Potential Trade with Core and Periphery: Industry Differences in Trade Patterns," Papers 10, American Institute for Contemporary German Studies-.
  2. Gual, Jordi & Martín, Carmela, 1994. "Trade and Foreign Direct Investment with Central and Eastern Europe: Its Impact on Spain," CEPR Discussion Papers 1006, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  3. Jonathan Eaton & Samuel Kortum, 1997. "Technology and Bilateral Trade," Boston University - Institute for Economic Development 79, Boston University, Institute for Economic Development.
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  4. Greenaway, David & Nam, Chong Hyun, 1988. "Industrialisation and Macroeconomic Performance in Developing Countries under Alternative Trade Strategies," Kyklos, Blackwell Publishing, vol. 41(3), pages 419-35.
  5. Schumacher, D., 1995. "Impact on German Trade of Increased Division of Labor with Eastern Europe," Papers 6, American Institute for Contemporary German Studies-.
  6. Robert C. Feenstra & James A. Markusen & Andrew K. Rose, 1998. "Undertstanding the Home Market Effect and the Gravity Equation: The Role of Differentiating Goods," NBER Working Papers 6804, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  7. Deardorff, A.V., 1995. "Determinants of Bilateral Trade : Does Gravity Work in a Neoclassical World?," Papers 95-05, Michigan - Center for Research on Economic & Social Theory.
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  8. Anderson, James E, 1979. "A Theoretical Foundation for the Gravity Equation," American Economic Review, American Economic Association, vol. 69(1), pages 106-16, March. [Downloadable!] (restricted)
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Cited by:
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  1. Marques, Helena, 2002. "Trade Similarities between Eastern and Southern Europe: Opportunities or Competition?," Estey Centre Journal of International Law and Trade Policy, Estey Centre for Law and Economics in International Trade, vol. 3(2). [Downloadable!]
  2. Yeboah, Osei-Agyeman & Shaik, Saleem & Wozniak, Shawn & Allen, Albert J., 2008. "Increased Cocoa Bean Exports under Trade Liberalization: A Gravity Model Approach," 2008 Annual Meeting, February 2-6, 2008, Dallas, Texas 6819, Southern Agricultural Economics Association. [Downloadable!]
  3. repec:bep:eaptop:v:5:y:2005:i:1:p:1386-1386 is not listed on IDEAS
  4. A. Porojan, 2001. "Trade Flows and Spatial Effects: The Gravity Model Revisited," Open Economies Review, Springer, vol. 12(3), pages 265-280, July. [Downloadable!] (restricted)
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