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A Tale of Parallel Integration Processes. A Gravity Analysis of EU Trade with Mediterranean and Central and Eastern European Countries

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  • Ferragina, Anna Maria

    (University of Rome Tor Vergata)

  • Giovannetti, Giorgia

    (University of Florence)

  • Pastore, Francesco

    (Università della Campania Luigi Vanvitelli)

Abstract

Despite the EU emphasis on the 1995 Barcelona process, trade integration with the Mediterranean (MED) countries is still underdeveloped. To contrast the success of EU integration with MED countries and that with the new EU members, we compute the trade potential of these EU partners from 1995 to 2002 using an "out-of-sample" methodology. The coefficients are taken from different panel estimators of the gravity equation relative to intra-EU trade. Our analysis suggests the existence of sizeable, unexploited trade potential with both groups of partners, although the ratio of potential to actual trade with the MED countries is much larger (from 1.7 to 2.5 times), more dispersed and stable compared to that with the CEECs. Moreover, the potential tends to converge to actual trade in a much longer time in the case of MED countries.

Suggested Citation

  • Ferragina, Anna Maria & Giovannetti, Giorgia & Pastore, Francesco, 2005. "A Tale of Parallel Integration Processes. A Gravity Analysis of EU Trade with Mediterranean and Central and Eastern European Countries," IZA Discussion Papers 1829, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp1829
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    2. Uri Dadush, 2015. "Economic integration in the time of turmoil," Policy notes & Policy briefs 1515, Policy Center for the New South.
    3. Karim El Aynaoui & Uri Dadush & Karim El Mokri & Rim Berahab, 2016. "The Unmet Challenge of Interdependence in the EU-MENA Space: A View from the South," Research papers & Policy papers 1607, Policy Center for the New South.
    4. P. Montalbano & S. Nenci, 2014. "Assessing the trade impact of the European Neighbourhood Policy on the EU-MED Free Trade Area," Applied Economics, Taylor & Francis Journals, vol. 46(7), pages 730-740, March.
    5. E. Mine Cinar & Joseph Johnson & Katherine Geusz, 2016. "Estimating Chinese Trade Relationships with the Silk Road Countries," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 24(1), pages 85-103, January.
    6. Rym Ayadi & Luc De Wulf & Moez El Elj & Michael Gasiorek & Ahmed Ghoneim & Javier Lopez Gonzalez & Selen Guerin & Peter Holmes & Hammad Kassal & Maryla Maliszewska & Mahmut Tekce, 2009. "Economic Integration in the Euro-Mediterranean Region," CASE Network Reports 0089, CASE-Center for Social and Economic Research.
    7. Ruhul Salim & Shahriar Kabir, 2010. "The Immediate Impact Of Euro On Intra-Regional Trade: An Event Study Approach," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 35(3), pages 43-55, September.
    8. Sekkat, Khalid, 2012. "Manufactured Exports and FDI in Southern Mediterranean Countries: Evolution, determinants and prospects," CEPS Papers 6849, Centre for European Policy Studies.
    9. Andreas Breitenfellner & Jesus Crespo Cuaresma & Peter Mooslechner & Doris Ritzberger-Grünwald, 2008. "The Impact of EU Enlargement in 2004 and 2007 on FDI and Migration Flows Gravity Analysis of Factor Mobility," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 2, pages 101-120.
    10. Eric Tremolada Álvarez (editor), 2013. "Repensando la integración y las integraciones," Books, Universidad Externado de Colombia, Facultad de Finanzas, Gobierno y Relaciones Internacionales, edition 1, volume 1, number 85.
    11. Hrechyshkina Olena & Samakhavets Maryia, 2019. "Merchandise trade in the eaeu integrating environment," Quaestiones Geographicae, Sciendo, vol. 38(4), pages 163-174, December.
    12. Alessandro Romagnoli & Luisa Mengoni, 2009. "The challenge of economic integration in the MENA region: from GAFTA and EU-MFTA to small scale Arab Unions," Economic Change and Restructuring, Springer, vol. 42(1), pages 69-83, May.
    13. Ebaidalla Mahjoub Ebaidalla & Mohammed Elhaj Mustafa Ali, 2018. "Assessing the Intra-Arab Trade Integration and Potential: Evidence from Stochastic Frontier Gravity Model," Working Papers 1247, Economic Research Forum, revised 07 Nov 2018.
    14. Harb George, 2010. "Communication Infrastructures, Institutional Efficiency and EU-Arab Trade: Assessment and Implications," Review of Middle East Economics and Finance, De Gruyter, vol. 6(2), pages 49-73, November.
    15. Cieślik, Ewa, 2017. "The New Silk Road: Seeking Opportunities for Polish Exports in the Chinese Market," Problems of World Agriculture / Problemy Rolnictwa Światowego, Warsaw University of Life Sciences, vol. 17(32, Part ), December.
    16. Ebaidalla Mahjoub Ebaidalla, 2016. "Trade between Egypt, Sudan and Ethiopia: Prospects and Challenges for Trilateral Trade Integration," Working Papers 1057, Economic Research Forum, revised 10 2016.

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    More about this item

    Keywords

    EU eastward enlargement; MED agreements; gravity equation; trade potential;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F15 - International Economics - - Trade - - - Economic Integration
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
    • P45 - Economic Systems - - Other Economic Systems - - - International Linkages
    • P52 - Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies

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