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Border effects in the enlarged EU area

  • M. Manchin
  • AM. Pinna

    ()

This paper looks at the issue of border effects in the enlarged European Union. We have considered accession countries of different size and other characteristics, i.e. Hungary, Poland, Bulgaria, Romania, Latvia and Cyprus. We have measured the extent to which internal trade exceeds international trade in a set up where controls for other economic determinants of commerce have been considered. In order to avoid inflated border effects, information at the regional level both for CEECs and EU countries has been used to construct a weighted measure of distance both for between-countries and internal distances. Furthermore, in order to separate border effects from impediments to trade due to technical barriers we look at the extent of border effects for sectors grouped according to the approach adopted by the EU to remove technical barriers in the EU. All distance measures have been found negative and significant for all types of products. The border effect coefficients for the harmonic mean have been found consistently smaller, regardless the relevance of technical barriers. Furthermore distance has also been found to be a slightly smaller impediment when using the effective measure. Checking for the presence of technical barriers to trade, our results suggest that the border effects are the largest for old approach products, where we expect to have the most important technical barrier to trade due to complicated harmonization procedures. The ‘other approach’ category has the smallest border effects, while the ‘mixed approach’ products are in between the two previous categories. Our countries of interest would trade with themselves 221 times more in old approach products, while only 24 times more in other approach products.

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File URL: http://crenos.unica.it/crenos/sites/all/modules/pubdlcnt/pubdlcnt.php?file=http://crenos.unica.it/crenos/sites/default/files/wp/03-01.pdf&nid=187
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Paper provided by Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia in its series Working Paper CRENoS with number 200301.

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Date of creation: 2003
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Handle: RePEc:cns:cnscwp:200301
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  1. Helliwell, John F, 2002. "Measuring the Width of National Boarders," Review of International Economics, Wiley Blackwell, vol. 10(3), pages 517-24, August.
  2. Keith Head & Thierry Mayer, 2000. "Non-Europe : The Magnitude and Causes of Market Fragmentation in the EU," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00267441, HAL.
  3. James E. Anderson & Eric van Wincoop, 2001. "Borders, Trade and Welfare," Boston College Working Papers in Economics 508, Boston College Department of Economics.
  4. Holger C. Wolf, 2000. "Intranational Home Bias In Trade," The Review of Economics and Statistics, MIT Press, vol. 82(4), pages 555-563, November.
  5. Russell H. Hillberry, 2002. "Aggregation bias, compositional change, and the border effect," Canadian Journal of Economics, Canadian Economics Association, vol. 35(3), pages 517-530, August.
  6. Carolyn L. Evans, 2001. "Border effects and the availability of domestic products abroad," Staff Reports 127, Federal Reserve Bank of New York.
  7. Holger C. Wolf, 1997. "Patterns of Intra- and Inter-State Trade," NBER Working Papers 5939, National Bureau of Economic Research, Inc.
  8. John F. Helliwell, 1997. "National Borders, Trade and Migration," NBER Working Papers 6027, National Bureau of Economic Research, Inc.
  9. Volker Nitsch, 2000. "National borders and international trade: evidence from the European Union," Canadian Journal of Economics, Canadian Economics Association, vol. 33(4), pages 1091-1105, November.
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