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The effect of preferential tariffs of the EU: Some evidence from B&H

Author

Listed:
  • Safet KURTOVIC

    () (Faculty of Management and Business Economics, University of Travnik, Aleja Konzula 5, Travnik, 72 270. Bosna and Herzegovina.)

  • Blerim HALILI

    () (GDepartment of Economics, College “Biznesi”, 29 Motrat Qiriazi, 1000. Tirana, Albania.)

  • Nehat MAXHUNI

    () (Department of Economics, College “Biznesi”, 29 Motrat Qiriazi, 1000. Tirana, Albania.)

Abstract

The process of trade liberalization is more or less accompanied by a reduction or elimination of tariffs. In this sense, the preferential tariffs for foreign exporters aim to increase trade flows, ensure access to foreign markets and achieve social welfare. Namely, both before and after the signing of the Stabilization and Association Agreement in 2000, Bosnia and Herzegovina (B&H) realized some benefits from the reduction of preferential tariffs of the EU which aimed to ease the access of B&H products to the EU market. Accordingly, the question arises to what extent the preferential tariffs of the EU may lead to an increase in exports of products from the six leading sectors of B&H, observed on the basis of the volume of exports. In order to assess the effect of the preferential tariffs on the export of six leading sector of B&H, we applied the gravity equation, aggregate data on an annual basis from 1995 to 2015, and some econometric techniques, such as pooled OLS, fixed effects, random effects and dynamic panel GMM. The results of the coefficients have shown that the average preferential tariffs are significant, i.e. that have a positive effect on the overall exports. On the other hand, the results of the coefficient estimates of the average preferential tariffs on the individual export of six leading sectors have shown a significant effect in the case of half the sectors.

Suggested Citation

  • Safet KURTOVIC & Blerim HALILI & Nehat MAXHUNI, 2017. "The effect of preferential tariffs of the EU: Some evidence from B&H," Journal of Economics and Political Economy, KSP Journals, vol. 4(3), pages 247-262, September.
  • Handle: RePEc:ksp:journ1:v:4:y:2017:i:3:p:247-262
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    References listed on IDEAS

    as
    1. James E. Anderson & Eric van Wincoop, 2003. "Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, American Economic Association, vol. 93(1), pages 170-192, March.
    2. Kurtovic, Safet & Halili, Blerim & Maxhuni, Nehat, 2016. "Bilateral Trade Elasticity: B&H versus its seven trade partners," MPRA Paper 72297, University Library of Munich, Germany.
    3. Hayakawa, Kazunobu, 2013. "How serious is the omission of bilateral tariff rates in gravity?," Journal of the Japanese and International Economies, Elsevier, vol. 27(C), pages 81-94.
    4. Guglielmo Maria Caporale & Christophe Rault & Robert Sova & Anamaria Sova, 2009. "Trade Specialisation and Economic Convergence: Evidence from Two Eastern European Countries," Discussion Papers of DIW Berlin 875, DIW Berlin, German Institute for Economic Research.
    5. Hansen, Jørgen Drud & Sala, Davide, 2013. "On the Equivalence of Tariffs and Quotas for Customs Unions," Discussion Papers of Business and Economics 11/2013, University of Southern Denmark, Department of Business and Economics.
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    More about this item

    Keywords

    Tariffs; Export; Sectors; Gravity equation.;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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