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The impact of the accession to the EU on trade flows of the Visegrad countries. Analysis based on the synthetic control method

Author

Listed:
  • Adam Pochmara

    (University of Warsaw, Faculty of Economic Sciences)

  • Jan Jakub Michałek

    (University of Warsaw, Faculty of Economic Sciences)

Abstract

In this paper, we analyse the trade implications of accession to the European Union (EU) for four Visegrad (V4) countries (Czechia, Hungary, Poland, and Slovakia). The estimation of the effects of integration with the EU was carried out as a comparative case study using the synthetic control method (SCM). The selection of control variables of “donor countries”, necessary to construct counterfactual trade flows of “synthetic” countries, is based on the gravity model. We analyse the impact of the accession to the EU for 307 country pairs, which covers about 85% of the trade flows of V4 countries. Using this SCM approach we find a positive impact of accession to the EU on the country's performance 15 years after accession. The trade growth resulting from the accession - in comparison to counterfactual aggregates - is large but differentiated. The exports of V4 countries doubled, except for Hungary, while imports increased by 51% on average. Consequently, the trade balances of V4 countries greatly improved compared to counterfactuals. The trade flows strongly increased among V-4 countries, in contrast with the “Hub and spoke” hypothesis. We checked the robustness of our empirical results by running a placebo test.

Suggested Citation

  • Adam Pochmara & Jan Jakub Michałek, 2023. "The impact of the accession to the EU on trade flows of the Visegrad countries. Analysis based on the synthetic control method," Working Papers 2023-21, Faculty of Economic Sciences, University of Warsaw.
    • Handle: RePEc:war:wpaper:2023-21
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    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration

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