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Trade Potential in an Enlarged European Union: A Recent Approach

  • Maria Paula Fontoura
  • Enrique Martínez-Galán
  • Isabel Proença

This paper aims to evaluate the trade potential of manufactured products between countries belonging to the EU in the threshold of its Eastern enlargement. For this purpose we use a Gravity model which is estimated with a Poisson Pseudo-Maximum Likelihood Method. We extend the specification of the gravity model in order to capture bilateral trade specificities between groups of countries of the enlarged EU, allowing to test the statistical significance of these inter-groups’ trade potential. In addition, it includes the Commodity Composition of Trade. The estimated coefficients are used to project exports of each country. We conclude that in 2002 the CEEC as a group had exhausted their export potentialities to the enlarged EU, whereas the same does not apply to its imports from the EU members.

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Paper provided by ISEG - School of Economics and Management, Department of Economics, University of Lisbon in its series Working Papers Department of Economics with number 2006/08.

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Date of creation: 2006
Date of revision:
Handle: RePEc:ise:isegwp:wp82006
Contact details of provider: Postal: Department of Economics, ISEG - School of Economics and Management, University of Lisbon, Rua do Quelhas 6, 1200-781 LISBON, PORTUGAL
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