The intra-industry trade dynamics in CEE countries: The role of trade agreements
This paper investigates the impact of regional trade agreements (RTAs) on the development of intra-industry trade (IIT) for eight Central and Eastern Europe countries (CEE) from 1997 to 2019. The aim of the paper is to compare and explain the possible heterogeneous impact of different RTAs on IIT...
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| Format: | Article |
| Language: | deu |
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Faculty of Economics University of Rijeka
2022-06-01
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| Series: | Zbornik radova Ekonomskog fakulteta u Rijeci : časopis za ekonomsku teoriju i praksu |
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| Online Access: | https://www.efri.uniri.hr/upload/Zbornik%201_2022/05-Zaninovic-2022-111.pdf |
| Summary: | This paper investigates the impact of regional trade agreements (RTAs) on the
development of intra-industry trade (IIT) for eight Central and Eastern Europe
countries (CEE) from 1997 to 2019. The aim of the paper is to compare and
explain the possible heterogeneous impact of different RTAs on IIT across
countries while controlling for differences in development levels between economic
integration member states. Our analysis is based on country-product level data
obtained from UN Comtrade. The main hypothesis of the paper is that the CEFTA
and EU integration agreements have a highly positive effect on IIT in comparison
with other RTAs. However, the scope of the impact varies across countries,
primarily depending on the economic development asymmetries that are in this
paper proxied by the GDP per capita. We developed and estimated an augmented
structural gravity model using Pseudo-Poisson Maximum Likelihood Estimator.
The main contribution of our paper is the inclusion of the FTA-economic
development gap interaction term, which enabled us to enrich the empirical
findings of the research. Our results show that the main hypothesis holds, but also
that an increase in economic asymmetries between integration members negatively
affects IIT, thus indicating potentially increasing trade adjustment costs for new
member states of an integration. These results go in favor of EU pre-integration
and post-integration policies that have the goal of diminishing the economic
development gap between future and present integration members. |
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| ISSN: | 1331-8004 1846-7520 |