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What Determines Sectoral Trade in the Enlarged EU?

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  • Helena Marques
  • Hugh Metcalf

Abstract

In this paper, we estimate a sectoral gravity model for trade within a heterogeneous trade bloc, the enlarged EU, comprised of a high-income group (wealthiest EU), a middle-income group (Greece, Portugal and Spain), and a low-income group (new Central and Eastern European member countries). The estimation was conducted on sectors with different degrees of scale economies and skill-intensities in the presence of transport costs. The results offer support for the call to incorporate trade theories based on both endowments and scale economies. In addition, whilst integrating poorer countries is beneficial for all of the participants in the bloc, there is still a role for a redistribution policy, such as the EU's Regional Policy, which should comprise a mix of policies, focusing on both income and education/skills, together with infrastructure development. Copyright Blackwell Publishing Ltd 2005.

Suggested Citation

  • Helena Marques & Hugh Metcalf, 2005. "What Determines Sectoral Trade in the Enlarged EU?," Review of Development Economics, Wiley Blackwell, vol. 9(2), pages 197-231, May.
  • Handle: RePEc:bla:rdevec:v:9:y:2005:i:2:p:197-231
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    References listed on IDEAS

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    Cited by:

    1. Groizard, José Luis & Marques, Helena & Santana, María, 2014. "Islands in trade: Disentangling distance from border effects," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 8, pages 1-46.
    2. Sebastian Benz, 2014. "Essays on Offshoring, Wage Inequality and Innovation," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 56, June.
    3. Utai UPRASEN & Bernadette ANDREOSSO-O'CALLAGHAN, "undated". "Impact of the 5th EU Enlargement on ASEAN," EcoMod2008 23800145, EcoMod.
    4. Sebastian Benz & Mario Larch & Markus Zimmer, 2014. "The Structure of Europe: International Input–Output Analysis with Trade in Intermediate Inputs and Capital Flows," Review of Development Economics, Wiley Blackwell, vol. 18(3), pages 461-474, August.
    5. Basher A. Balg & Hugh Metcalf, 2010. "Modeling Exchange Rate Volatility," Review of International Economics, Wiley Blackwell, vol. 18(1), pages 109-120, February.
    6. repec:eee:joecas:v:13:y:2016:i:c:p:8-20 is not listed on IDEAS

    More about this item

    JEL classification:

    • F1 - International Economics - - Trade
    • L6 - Industrial Organization - - Industry Studies: Manufacturing

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