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Regional and international trade of Armenia: Perspectives and potentials

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Listed:
  • Hayrapetyan Grigor

    ()

  • Hayrapetyan Viktoriya

    ()

Abstract

Unfavorable geopolitical situation and small scale of economy, trade balance deficit and raw-materials export enforce Armenia to look for new geographical and product perspectives in its foreign trade. Our paper aims to estimate trade potential for Armenia by product groups in regional and international directions using gravity approach. Applied gravity model estimates trade flows, which are disaggregated into 7 groups according to BEC’s 1-digit classification, between 139 countries during 2003-2007. Our key findings imply that trade relations of Armenia with most of main trade partners have no potential to develop. Armenia has exceeded its export potential almost with all the CIS countries. Trade relations with the EU countries should be re-considered on both product and geographical directions. Re-opening of Armenian-Turkish border could provide significant economic benefit for Armenian exporters. The most perspective product groups of Armenian export seem to be “Industrial supplies”, “Food and beverages”, and “Consumer goods”.

Suggested Citation

  • Hayrapetyan Grigor & Hayrapetyan Viktoriya, 2011. "Regional and international trade of Armenia: Perspectives and potentials," EERC Working Paper Series 11/14e, EERC Research Network, Russia and CIS.
  • Handle: RePEc:eer:wpalle:11/14e
    as

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    References listed on IDEAS

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    1. Simon J. Evenett & Wolfgang Keller, 2002. "On Theories Explaining the Success of the Gravity Equation," Journal of Political Economy, University of Chicago Press, vol. 110(2), pages 281-316, April.
    2. Óscar Afonso, 2001. "The Impact of International Trade on Economic Growth," FEP Working Papers 106, Universidade do Porto, Faculdade de Economia do Porto.
    3. Raymond Vernon, 1966. "International Investment and International Trade in the Product Cycle," The Quarterly Journal of Economics, Oxford University Press, vol. 80(2), pages 190-207.
    4. Klein, Michael W. & Shambaugh, Jay C., 2006. "Fixed exchange rates and trade," Journal of International Economics, Elsevier, vol. 70(2), pages 359-383, December.
    5. Freinkman, Lev & Polyakov, Evgeny & Revenco, Carolina, 2003. "Armenia’s trade performance in 1995-2002 and the effect of closed borders: a cross-country perspective," MPRA Paper 10065, University Library of Munich, Germany.
    6. De Benedictis Luca & Vicarelli Claudio, 2005. "Trade Potentials in Gravity Panel Data Models," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 5(1), pages 1-33, September.
    7. Paul Krugman, 1998. "Space: The Final Frontier," Journal of Economic Perspectives, American Economic Association, vol. 12(2), pages 161-174, Spring.
    8. Hausman, Jerry A & Taylor, William E, 1981. "Panel Data and Unobservable Individual Effects," Econometrica, Econometric Society, vol. 49(6), pages 1377-1398, November.
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    More about this item

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation

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