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Trade integration between Eastern and Western Europe: Politics follows the market

  • Piazolo, Daniel

This paper examines to what extent Eastern Europe trade reorientation towards the West has been driven by market forces versus policies for regional integration. Hierarchical cluster analysis based on bilateral trade intensity reveals the convergence of regional trade structures to the pre-World-War II pattern. Estimates of the expected trade pattern of Eastern Europe with a gravity model predict continuing rising importance of the EU. Furthermore, the assessment of the welfare implications of preferential access to EU markets shows that beneficial effects of trade expansion are likely to outweigh possible distortions. Hence integration policies follow the facts created by the market.

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Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 745.

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Date of creation: 1996
Date of revision:
Handle: RePEc:kie:kieliw:745
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  1. Schumacher, D., 1995. "Impact on German Trade of Increased Division of Labor with Eastern Europe," Papers 6, American Institute for Contemporary German Studies-.
  2. Deardorff, A.V., 1995. "Determinants of Bilateral Trade : Does Gravity Work in a Neoclassical World?," Papers 95-05, Michigan - Center for Research on Economic & Social Theory.
  3. Havrylyshyn, Oleh & Pritchett, Lant, 1991. "European trade patterns after the transition," Policy Research Working Paper Series 748, The World Bank.
  4. Laaser, Claus-Friedrich & Schrader, Klaus, 1992. "Zur Reintegration der baltischen Staaten in die Weltwirtschaft," Open Access Publications from Kiel Institute for the World Economy 1526, Kiel Institute for the World Economy (IfW).
  5. Frankel, Jeffrey & Stein, Ernesto & Wei, Shang-jin, 1995. "Trading blocs and the Americas: The natural, the unnatural, and the super-natural," Journal of Development Economics, Elsevier, vol. 47(1), pages 61-95, June.
  6. Bikker, Jacob A, 1987. "An International Trade Flow Model with Substitution: An Extension of the Gravity Model," Kyklos, Wiley Blackwell, vol. 40(3), pages 315-37.
  7. Deardoff, A.V., 1995. "Determinants of Bilateral Trade: Does Gravity Work in a Neoclassical World?," Working Papers 382, Research Seminar in International Economics, University of Michigan.
  8. Baldwin, Richard E., 1995. "The Eastern enlargement of the European Union," European Economic Review, Elsevier, vol. 39(3-4), pages 474-481, April.
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