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Trade-Enhancing EU Enlargement and the Resurgence of East-East Trade

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  • Cecília Hornok

    (Central European University)

Abstract

This article uses the episode of EU enlargement in 2004 as a natural experiment to identify the trade effect of declining border barriers across otherwise well integrated markets. Despite the fact that traditional trade policy measures (tariffs, quantitative restrictions) were already eliminated for most industrial goods in trade between the pre-enlargement EU-15 countries and eight of the countries that entered the EU in 2004 (EU-8)2 as well as among the EU-8 themselves, EU enlargement is shown to have caused a significant trade creation. The effect was most pronounced for trade among EU-8 countries, with a magnitude of 4% to 9% in ad valorem tariff-equivalent terms. Technology-intensive industries benefitted most strongly from enlargement, and a significant anticipatory effect can also be detected for 2003. These findings highlight the importance of non-policy related border barriers to trade and may also prove useful in assessing the potential for trade integration in the current EU candidate countries.

Suggested Citation

  • Cecília Hornok, 2010. "Trade-Enhancing EU Enlargement and the Resurgence of East-East Trade," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 3, pages 79-94.
    • Handle: RePEc:onb:oenbfi:y:2010:i:3:b:4
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    References listed on IDEAS

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    1. Matthieu Bussière & Jarko Fidrmuc & Bernd Schnatz, 2005. "Trade Integration of Central and Eastern European Countries: Lessons from a Gravity Model," Working Papers 105, Oesterreichische Nationalbank (Austrian Central Bank).
    2. Luca De Benedictis & Roberta De Santis & Claudio Vicarelli, 2005. "Hub-and-Spoke or else? Free trade agreements in the 'enlarged' European Union," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 2(2), pages 245-260, December.
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    Cited by:

    1. Śledziewska Katarzyna & Akhvlediani Tinatin, 2017. "What Determines Export Performances in High‑tech Industries," Central European Economic Journal, Sciendo, vol. 1(48), pages 37-49, November.
    2. Inmaculada Martínez-Zarzoso & Martina Vidovic & Anca M. Voicu, 2014. "EU-Accession Effects on Sectoral Trade: A Helpman-Melitz-Rubinstein Approach with Panel Data," CESifo Working Paper Series 4903, CESifo.
    3. Martínez-Zarzoso, Inmaculada & Voicu, Anca M. & Vidovic, Martina, 2020. "Production networks in Europe: A natural experiment of the EU enlargement to the east," University of Göttingen Working Papers in Economics 390, University of Goettingen, Department of Economics.
    4. Cecília Hornok, 2011. "Need for Speed: Is Faster Trade in the EU Trade-Creating?," wiiw Working Papers 75, The Vienna Institute for International Economic Studies, wiiw.
    5. Kaplan, Lennart C. & Kohl, Tristan & Martínez-Zarzoso, Inmaculada, 2016. "The effects of the CEECS's accession on sectoral trade: A value added perspective," University of Göttingen Working Papers in Economics 272, University of Goettingen, Department of Economics.
    6. Martínez-Zarzoso, Inmaculada & Voicu, Anca M. & Vidovic, Martina, 2011. "CEECs Integration into Regional Production Networks. Trade Effects of EU-Accession," Proceedings of the German Development Economics Conference, Berlin 2011 55, Verein für Socialpolitik, Research Committee Development Economics.
    7. Cecília Hornok, 2011. "Gravity or Dummies? The Limits of Identification in Gravity Estimations," CeFiG Working Papers 15, Center for Firms in the Global Economy, revised 26 Sep 2011.
    8. Nordlund, Carl, 2023. "Transformations, trajectories and similarities of national production structures: a comparative fingerprinting approach," SocArXiv 6byxh, Center for Open Science.
    9. Gábor HUNYA & Sándor RICHTER, 2011. "Mutual trade and investment of the Visegrad countries before and after their EU accession," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 2, pages 77-91, December.
    10. Rumen Dobrinsky & Gabor Hunya & Sandor Richter, 2014. "Monthly Report No. 5/2014," wiiw Monthly Reports 2014-05, The Vienna Institute for International Economic Studies, wiiw.
    11. Fries, Jan, 2014. "Age and skill bias of trade liberalisation? Heterogeneous employment effects of EU Eastern Enlargement," ZEW Discussion Papers 14-113, ZEW - Leibniz Centre for European Economic Research.
    12. Inmaculada Martínez-Zarzoso & Felicitas Nowak-Lehmann D. & Florian Johannsen, 2012. "Foreign Aid, Exports And Development In Euromed," Middle East Development Journal (MEDJ), World Scientific Publishing Co. Pte. Ltd., vol. 4(02), pages 1-24.
    13. Tang, Donny, 2016. "Has the Financial Integration affected the European Union (EU) trade with the New Member Countries from Central and Eastern Europe (CEEC) during 1994–2013?," The Journal of Economic Asymmetries, Elsevier, vol. 13(C), pages 8-20.
    14. Inmaculada Martinez-Zarzoso & Anca Voicu & Martina Vidovic, 2015. "Central East European Countries’ accession into the European Union: role of extensive margin for trade in intermediate and final goods," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 42(4), pages 825-844, November.
    15. Vasily Astrov & Sebastian Leitner & Isilda Mara & Sandor Richter, 2017. "Monthly Report No. 5/2017," wiiw Monthly Reports 2017-05, The Vienna Institute for International Economic Studies, wiiw.
    16. Gnutzmann, Hinnerk & Gnutzmann-Mkrtchyan, Arevik, 2020. "The Cost of Borders: Evidence from the Eurasian Customs Union," Hannover Economic Papers (HEP) dp-664, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
    17. Tinatin Akhvlediani & Katarzyna Śledziewska, . "The Impacts of Common Commercial Policy on Export Performances of Visegrad Countries," Prague Economic Papers, University of Economics, Prague, vol. 0, pages 1-16.
    18. Tinatin Akhvlediani & Katarzyna Śledziewska, 2017. "The Impacts of Common Commercial Policy on Export Performances of Visegrad Countries," Prague Economic Papers, Prague University of Economics and Business, vol. 2017(1), pages 3-18.
    19. Inmaculada Martínez‐Zarzoso & Anca M. Voicu & Martina Vidovic, 2020. "Production networks in Europe: A natural experiment of the European Union enlargement to the east," Review of International Economics, Wiley Blackwell, vol. 28(5), pages 1143-1163, November.

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    More about this item

    Keywords

    Trade costs; border effect; gravity estimation; European integration;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration

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