IDEAS home Printed from
   My bibliography  Save this paper

European integration and EU eastward enlargement process in international trade: using a gravity approach for exploring bilateral trade flows


  • Paas, Tiiu



The paper is going to give an overview of the comparative evaluation of the Baltic Sea region countries (Sweden, Denmark, Finland, Norway, Germany, Russia, Poland, Estonia, Latvia and Lithuania) competitiveness based on various methodological approaches ranking countries according to their level of international competitiveness. The study mainly bases on the data of the United States Agency for International Development (USAID), Harvard Institute for International Development (HIID), International Institute for Management Development (IMD) and national and international statistical authorities. Factor analysis as a data reduction method is used in order to elaborate generalized indicators (factors) of a country's competitiveness level and to compare the factor analysis based rankings of the Baltic Sea region economies with the ranking results based on the other methodological approaches (HIID methodology for evaluation of the economies' in transition competitiveness, World Competitiveness Yearbook (WCY) methodology). According to the results of using factor analysis, the main generalized indicators that explain a country's competitiveness level are the size of economy and level of economic development, which explain more than 50% of variation of initial indicators of a country's macroeconomic environment. Other generalized indicators could be interpreted as the factors that characterize development of infrastructure and/or human resources, and also openness of economy. Based on the results of the study, it is possible to conclude that the Baltic Sea region countries have good competitive position among the leading world economies and the economies in transition. The countries around the Baltic Sea have historical and cultural traditions for developing trade relations and economic cooperation. The development of mutually beneficial economic co-operation between the capital abundant countries such as Germany and the Scandinavian countries and the transitional countries of the region, which provide the possibilities of entrance into the new markets and also rather cheap and qualified labour force, has positively influenced economic environment of all Baltic Sea region countries. For the Baltic economies in transition, the regional co-operation has created conditions that support their rapid economic restructuring, development of infrastructure and human capital, and quick rise of competitiveness. To sum up, the Baltic Sea region has good potential for competitive economic development due to its favourable location between East and West and dynamic interdependence between transition and integration, stimulating both processes.

Suggested Citation

  • Paas, Tiiu, 2002. "European integration and EU eastward enlargement process in international trade: using a gravity approach for exploring bilateral trade flows," ERSA conference papers ersa02p129, European Regional Science Association.
  • Handle: RePEc:wiw:wiwrsa:ersa02p129

    Download full text from publisher

    File URL:
    Download Restriction: no

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wiw:wiwrsa:ersa02p129. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Gunther Maier). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.