Trade Effects due to the EU Accession: The case of Greece
This paper estimates the effects on Greek trade balance due to the EU accession. The analytical and the residuals approach were implemented. A full trade model was used, since Greece relies on imported inputs for export production and a standard model of trade may not be appropriate for the country. After the accession, the country had to liberalize its trade by abolishing all barriers, such as tariffs, quotas, financial stringencies, indirect taxes on imports and export subsidies. The gradual abolition of trade protection and promotion, which took place during the 1981 - 1992 period, had a substantial negative effect on Greece’s trade balance and led to a large increase of its deficit. This effect also implies trade creation and thus, improvement in terms of static welfare and resource allocation. The above impact is mainly based on the large increase of imports, as the accession’s negative effects on Greek exports were quite small.
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