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Trade Potential In An Enlarged European Union: A Recent Approach

  • Enrique Martínez-Galán

    (ISEG-UTL & Portuguese Ministry for Finance)

  • Maria-Paula Fontoura

    (ISEG-UTL)

  • Isabel Proença

    (ISEG- UTL & CEMAPRE)

This paper aims to evaluate the trade potential of manufactured products between the members of the EU25 in the threshold of its Eastern enlargement. We estimate, for 2002, a cross-section gravity model, whose coefficients will be used to project the “natural” trade relations between them. Relatively to previous evaluations of trade potential, we include in the gravity model a variable related to the countries’ complementarities in terms of their Commodity Composition of Trade and we opt for a Poisson Pseudo-Maximum Likelihood Estimator. The latter is confronted with the OLS estimator normally used in this type of models.

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Paper provided by EconWPA in its series International Trade with number 0508011.

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Length: 31 pages
Date of creation: 31 Aug 2005
Date of revision:
Handle: RePEc:wpa:wuwpit:0508011
Note: Type of Document - pdf; pages: 31
Contact details of provider: Web page: http://128.118.178.162

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  12. Marius Brülhart & Mary Kelly, 1998. "Ireland's Trading Potential with Central and Eastern European Countries: A Gravity Study," Economics Technical Papers 9815, Trinity College Dublin, Department of Economics.
  13. Jacques J. Polak, 1996. "Is APEC a Natural Regional Trading Bloc? A Critique of the ‘Gravity Model’of International Trade," The World Economy, Wiley Blackwell, vol. 19(5), pages 533-543, 09.
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  17. Cees van Beers & Guido Biessen, 1996. "Trade Possibilities and Structure of Foreign Trade: The Case of Hungary and Poland," Comparative Economic Studies, Palgrave Macmillan, vol. 38(2-3), pages 1-19, September.
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  19. 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.
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  23. Jeffrey A. Frankel, 1997. "Regional Trading Blocs in the World Economic System," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 72, March.
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  25. Dieter Schumacher, 2001. "Market Size and Factor Endowment: Explaining Comparative Advantage in Bilateral Trade by Differences in Income and Per Capita Income," Discussion Papers of DIW Berlin 259, DIW Berlin, German Institute for Economic Research.
  26. Limao, Nuno & Venables, Anthony J., 1999. "Infrastructure, geographical disadvantage, and transport costs," Policy Research Working Paper Series 2257, The World Bank.
  27. Finger, J M & Kreinin, M E, 1979. "A Measure of 'Export Similarity' and Its Possible Uses," Economic Journal, Royal Economic Society, vol. 89(356), pages 905-12, December.
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  31. José Caetano & Aurora Galego, 2005. "Trade Flows among CEEC and EU Countries: what future perspectives?," International Trade 0504002, EconWPA.
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