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The determinants of intra-regional trade in the Western Balkans

Author

Listed:
  • Jelena Trivic

    () (University of Banja Luka, Faculty of Economics, Banja Luka, Bosnia and Herzegovina)

  • Łukasz Klimczak

    () (University of Economics, Faculty of Economics and International Relations,Cracow,Poland)

Abstract

The purpose of this paper is to identify factors that have an influence on bilateral trade among the Western Balkan countries for the period from 1995 to 2012. Unlike a majority of works that have dealt with the subject of trade in the Balkans or the SEEs, not only geographical, economic or political factors are taken into account, but also factors constituting cultural, communicational and historical types of the so-called “distance” between countries. In order to assess their influence on trade values, an augmented version of the gravity model is employed. It was estimated threefold: as pooled data by OLS, as a random effects model and as a fixed effects model with an additional estimation of time-invariant variables following the method of Cheng and Wall (2005). The results of the research are surprising, as the strongest influence on trade values were exhibited by variables representing ease of a direct communication and similarity of religious structures. In addition, war and one-year-post-war effect showed a strong and statistically important influence. Thus, the main conclusion is that non-economic factors in the region of the Western Balkans play the most important role in determining trade values between countries.

Suggested Citation

  • Jelena Trivic & Łukasz Klimczak, 2015. "The determinants of intra-regional trade in the Western Balkans," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics, vol. 33(1), pages 37-66.
  • Handle: RePEc:rfe:zbefri:v:33:y:2015:i:1:p:37-66
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    References listed on IDEAS

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    Keywords

    trade determinants; Western Balkans; gravity model; panel data; distance;

    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

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