IDEAS home Printed from https://ideas.repec.org/a/prg/jnlpep/v2018y2018i6id663p654-667.html
   My bibliography  Save this article

Do Free Trade Regimes and Common Currency Drive Export Growth?

Author

Listed:
  • Mindaugas Butkus
  • Henrikas Karpavičius
  • Kristina Matuzevičiūtė

Abstract

It is believed that in many countries export activities could enhance countries' capabilities. It is also believed that trade liberalization or common currency could be an export driver. This paper examines the impact of trade liberalization and common currency on EU countries' export growth. The methodology applied in this research is constructed using specifics of the data that arise from a natural experiment. We examined how exogenous events like joining the EU, WTO, EFTA or becoming a member of Eurozone change the environment, in which countries trade. The results using an unbalanced panel data consisting of 28 EU countries for the period 1995-2015 revealed that membership in WTO instantly increases export by 12.5-13.5%, but has no extra effect in longer period; membership in the EU and EFTA has effect on export with a time lag and common currency did not affect export growth at all.

Suggested Citation

  • Mindaugas Butkus & Henrikas Karpavičius & Kristina Matuzevičiūtė, 2018. "Do Free Trade Regimes and Common Currency Drive Export Growth?," Prague Economic Papers, Prague University of Economics and Business, vol. 2018(6), pages 654-667.
  • Handle: RePEc:prg:jnlpep:v:2018:y:2018:i:6:id:663:p:654-667
    DOI: 10.18267/j.pep.663
    as

    Download full text from publisher

    File URL: http://pep.vse.cz/doi/10.18267/j.pep.663.html
    Download Restriction: free of charge

    File URL: http://pep.vse.cz/doi/10.18267/j.pep.663.pdf
    Download Restriction: free of charge

    File URL: https://libkey.io/10.18267/j.pep.663?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Meriem Bouchoucha, 2015. "The Euro Effect on Eurozone Exports," International Economic Journal, Taylor & Francis Journals, vol. 29(3), pages 399-418, September.
    2. L Alan Winters, 2004. "Trade Liberalisation and Economic Performance: An Overview," Economic Journal, Royal Economic Society, vol. 114(493), pages 4-21, February.
    3. Frankel, Jeffrey, 2008. "The Estimated Effects of the Euro on Trade: Why Are They Below Historical Effects of Monetary Unions Among Smaller Countries?," Working Paper Series rwp08-076, Harvard University, John F. Kennedy School of Government.
    4. Davidson, Russell & MacKinnon, James G., 1993. "Estimation and Inference in Econometrics," OUP Catalogue, Oxford University Press, number 9780195060119.
    5. Alvarez, Roberto, 2004. "Sources of export success in small- and medium-sized enterprises: the impact of public programs," International Business Review, Elsevier, vol. 13(3), pages 383-400, June.
    6. Stoian, Maria-Cristina & Rialp, Alex & Rialp, Josep, 2011. "Export performance under the microscope: A glance through Spanish lenses," International Business Review, Elsevier, vol. 20(2), pages 117-135, April.
    7. Carrere, Celine, 2006. "Revisiting the effects of regional trade agreements on trade flows with proper specification of the gravity model," European Economic Review, Elsevier, vol. 50(2), pages 223-247, February.
    8. Baldauf, Artur & Cravens, David W. & Wagner, Udo, 2000. "Examining determinants of export performance in small open economies," Journal of World Business, Elsevier, vol. 35(1), pages 61-79, April.
    9. Joseph Francois & Hans Van Meijl & Frank Van Tongeren, 2005. "Trade liberalization in the Doha Development Round [Trade in Manufactures, the Outcome of the Uruguay Round and Developing Country Interests]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 20(42), pages 350-391.
    10. Andrea Calabrò & Donata Mussolino, 2013. "How do boards of directors contribute to family SME export intensity? The role of formal and informal governance mechanisms," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 17(2), pages 363-403, May.
    11. Andrew K. Rose, 2000. "One money, one market: the effect of common currencies on trade," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 15(30), pages 08-45.
    12. Muhammad Zakaria, 2014. "Effects of Trade Liberalization on Exports, Imports and Trade Balance in Pakistan: A Time Series Analysis," Prague Economic Papers, Prague University of Economics and Business, vol. 2014(1), pages 121-139.
    13. Kris Iyer, 2010. "The Determinants of Firm-Level Export Intensity in New Zealand Agriculture and Forestry ," Economic Analysis and Policy, Elsevier, vol. 40(1), pages 90-101, March.
    14. Balabanis, George I. & Katsikea, Eva. S., 2003. "Being an entrepreneurial exporter: does it pay?," International Business Review, Elsevier, vol. 12(2), pages 233-252, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:prg:jnlpep:v:preprint:id:663:p:1-14 is not listed on IDEAS
    2. Jayjit Roy, 2014. "On the robustness of the trade-inducing effects of trade agreements and currency unions," Empirical Economics, Springer, vol. 47(1), pages 253-304, August.
    3. Timo Tohmo & Kari Heimonen & Mika Nieminen, 2021. "Effects of the European Monetary Union on High-Technology Exports," Journal of Industry, Competition and Trade, Springer, vol. 21(2), pages 251-285, June.
    4. Sousa, Carlos M.P. & Bradley, Frank, 2008. "Antecedents of international pricing adaptation and export performance," Journal of World Business, Elsevier, vol. 43(3), pages 307-320, July.
    5. Christophe Rault & Robert Sova & Ana Maria Sova, 2009. "Modelling international trade flows between CEEC and OECD countries," Applied Economics Letters, Taylor & Francis Journals, vol. 16(15), pages 1547-1554.
    6. Jérôme Trotignon, 2009. "L'intégration régionale favorise-t-elle la multilatéralisation des échanges ?," Post-Print halshs-00335633, HAL.
    7. Thibaut Dort & Pierre-Guillaume Méon & Khalid Sekkat, 2014. "Does investment spur growth everywhere? Not where institutions are weak," Post-Print CEB, ULB -- Universite Libre de Bruxelles, vol. 67(4), pages 482-505, October.
    8. Mojsoska-Blazevski, Nikica & Petreski, Marjan, 2010. "Western Balkan’s trade with the EU and CEFTA-2006: Evidence from Macedonian data," MPRA Paper 41942, University Library of Munich, Germany.
    9. Stephanie E. Mansion & Andreas Bausch, 2020. "Intangible assets and SMEs’ export behavior: a meta-analytical perspective," Small Business Economics, Springer, vol. 55(3), pages 727-760, October.
    10. Oliver Holtemöller & Götz Zeddies, 2013. "Has the Euro increased international price elasticities?," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 40(1), pages 197-214, February.
    11. Inmaculada Martínez-Zarzoso, 2019. "The Euro and the CFA Franc: Evidence of Sectoral Trade Effects," Open Economies Review, Springer, vol. 30(3), pages 483-504, July.
    12. Fritz Breuss, 2009. "Ten Years of EMU – Achievements, Weaknesses, Challenges," Austrian Economic Quarterly, WIFO, vol. 14(1), pages 49-72, April.
    13. Oxana Babecká Kucharčuková & Jan Babecký & Martin Raiser, 2012. "Gravity Approach for Modelling International Trade in South-Eastern Europe and the Commonwealth of Independent States: The Role of Geography, Policy and Institutions," Open Economies Review, Springer, vol. 23(2), pages 277-301, April.
    14. J. M. C. Santos Silva & Silvana Tenreyro, 2006. "The Log of Gravity," The Review of Economics and Statistics, MIT Press, vol. 88(4), pages 641-658, November.
    15. Andrea F. Presbitero, 2006. "Institutions and geography as sources of economic development," Journal of International Development, John Wiley & Sons, Ltd., vol. 18(3), pages 351-378.
    16. Christopher Adam & David Cobham, 2008. "Alternative Exchange Rate Regimes for MENA countries: Gravity Model Estimates of the Trade Effects," CERT Discussion Papers 0803, Centre for Economic Reform and Transformation, Heriot Watt University.
    17. Tommaso Mancini Griffoli, 2006. "Explaining the Euro's Effect on Trade? Interest Rates in an Augmented Gravity Equation," IHEID Working Papers 10-2006, Economics Section, The Graduate Institute of International Studies.
    18. Busayo Ajayi, 2016. "The Impact of Entrepreneurial Orientation and Networking Capabilities on the Export Performance of Nigerian Agricultural SMEs," Journal of Entrepreneurship and Innovation in Emerging Economies, Entrepreneurship Development Institute of India, vol. 2(1), pages 1-23, January.
    19. Mahvash S Qureshi & Mr. Charalambos G Tsangarides, 2010. "The Empirics of Exchange Rate Regimes and Trade: Words vs. Deeds," IMF Working Papers 2010/048, International Monetary Fund.
    20. Ball, Laurence, 2010. "The Performance of Alternative Monetary Regimes," Handbook of Monetary Economics, in: Benjamin M. Friedman & Michael Woodford (ed.), Handbook of Monetary Economics, edition 1, volume 3, chapter 23, pages 1303-1343, Elsevier.
    21. Roger Vicquéry, 2021. "The Common Currency Effect on International Trade: Evidence from an Accidental Monetary Union," Working papers 856, Banque de France.

    More about this item

    Keywords

    export growth; trade regimes; common currency;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission

    Statistics

    Access and download statistics

    Corrections

    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:prg:jnlpep:v:2018:y:2018:i:6:id:663:p:654-667. See general information about how to correct material in RePEc.

    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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Stanislav Vojir (email available below). General contact details of provider: https://edirc.repec.org/data/uevsecz.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.