Trade Flows Between Ceec During Integration Period Into the Eu. Did Gravity Law Really Work?

Table of Content

List of abbreviations II

Abstract 1

Introduction 1

Literature review- Existing Theoretical Approaches 2

Results - Estimation of Gravity Model 4

Discussion of the results 5

Recommendations – What can be done for trade facilitation? 6

Conclusion 6

Bibliography III

Appendixes IV

List of abbreviations

1. CEEC – Central-Eastern European countries

2. Etc. – etcetera

3. EU – European Union

Abstract

This paper discusses the influence of different factors on the trade flows between five Central-Eastern European countries (Poland, Czech Republic, Slovakia, Hungary and Bulgaria) during the transition period and after their integration into the EU in 2004 and 2007. As the analyzing tool we have chosen the gravity model of trade. After conducting a small research we have seen that the intensification of trade between CEEC took place gradually in the pre-integration period, so the very fact of joining the EU didn’t cause a boom in trade. We have also come to the conclusion that trade within this group of countries can be intensified by combination of moderate protectionism policy and decreasing of economic distance between them.

Introduction

Substantional changes in the geographic structure of international trade have motivated economists to pay more attention to the development of further empirical approaches which would allow them to estimate the role of regional integration in settlement of trade relations between the countries. As the result of these researches a gravity model of international trade was developed.

By analogy with the Newton’s gravity law, this model expresses bilateral trade as the function of two main independent variables: it is directly proportional to the economic sizes of two countries involved in trade and inversely proportional to the distance between...