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Border Effects and East-West Integration

  • Angela Cheptea

A new method for measuring trade potential from border effects is developed and applied to manufactured trade between the old fifteen European Union (EU) members and twelve Central and East European (CEE) economies. Border effects are estimated with three theoretically compatible trade specifications, and much larger trade potentials are obtained than predicted by usual trade potential models. Even after a decade of regional trade liberalization, the integration of CEE and EU economies is two to three times weaker than intra-EU integration, revealing a large potential for East-West European trade.

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File URL: http://www6.rennes.inra.fr/smart/Media/Working-papers/WP10-15
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Paper provided by INRA UMR SMART in its series Working Papers SMART - LERECO with number 10-15.

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Length: 26 pages
Date of creation: 2010
Date of revision:
Handle: RePEc:rae:wpaper:201015
Contact details of provider: Web page: http://www.rennes.inra.fr/smart_eng/Working-Papers-SMART-LERECO
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  11. Krugman, Paul, 1980. "Scale Economies, Product Differentiation, and the Pattern of Trade," American Economic Review, American Economic Association, vol. 70(5), pages 950-59, December.
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