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Ireland’s Trading Potential with Central and Eastern European Countries - A Gravity Study

  • Marius Brülhart

    (University of Manchester)

  • Mary J. Kelly

    (Trinity College Dublin)

Using a gravity model, we estimate the magnitude of potential trade flows between Ireland and the five CEEC countries which are 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 less than half of their potential size. The value of estimated potential trade corresponds to 0.8 per cent of Irish GNP. The actual share in 1994 was 0.5 per cent. EU enlargement would raise Ireland-CEEC trade to 1.2 per cent 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 8.3 per cent of Irish GNP in 2020.

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File Function: First version, 1999
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Article provided by Economic and Social Studies in its journal Economic and Social Review.

Volume (Year): 30 (1999)
Issue (Month): 2 ()
Pages: 159-174

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Handle: RePEc:eso:journl:v:30:y:1999:i:2:p:159-174
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  1. Greenaway, David & Nam, Chong Hyun, 1988. "Industrialisation and Macroeconomic Performance in Developing Countries under Alternative Trade Strategies," Kyklos, Wiley Blackwell, vol. 41(3), pages 419-35.
  2. Schumacher, D., 1995. "Impact on German Trade of Increased Division of Labor with Eastern Europe," Papers 6, American Institute for Contemporary German Studies-.
  3. Feenstra, Robert & Markusen, James R. & Rose, Andrew K, 1998. "Understanding the Home Market Effect and the Gravity Equation: The Role of Differentiating Goods," CEPR Discussion Papers 2035, C.E.P.R. Discussion Papers.
  4. 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.
  5. Vittas, H. & Mauro, P., 1995. "Potential Trade with Core and Periphery: Industry Differences in Trade Patterns," Papers 10, American Institute for Contemporary German Studies-.
  6. Anderson, James E, 1979. "A Theoretical Foundation for the Gravity Equation," American Economic Review, American Economic Association, vol. 69(1), pages 106-16, March.
  7. Alan V. Deardorff, 1995. "Determinants of Bilateral Trade: Does Gravity Work in a Neoclassical World?," NBER Working Papers 5377, National Bureau of Economic Research, Inc.
  8. Karolina Ekholm & Johan Torstensson & Rasha Torstensson, 1996. "The Economics of the Middle East Peace Process: Are There Prospects for Trade and Growth?," The World Economy, Wiley Blackwell, vol. 19(5), pages 555-574, 09.
  9. Jonathan Eaton & Samuel Kortum, 1997. "Technology and Bilateral Trade," Boston University - Institute for Economic Development 79, Boston University, Institute for Economic Development.
  10. repec:cup:cbooks:9780521088237 is not listed on IDEAS
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