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An econometric efficiency analysis for Romania’s trade partnerships with the E.U. member countries

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  • Daniela VIORICA

    ("Alexandru Ioan Cuza" University of Iasi, Faculty of Economics and Business Administration, Romania)

Abstract

The objective of this paper is to conduct a study on the effectiveness of international trade between Romania and its EU partners. The approach on efficiency is an econometric one, by estimating a stochastic frontier of efficiency, frontier that results from decomposing the modeling error of a gravity model. The analysis results will highlight the most effective and ineffective partnerships in foreign trade for Romania, among the EU members. To estimate the stochastic frontier efficiency for the trade partnerships we used as endogenous variable the ratio between imports and exports, weighted by the size of trade flows with the partner country in Romania's total trade flows. As exogenous variables we used the classical gravitational variables, GDP of the partner country and the square of the distance between the capitals of the two partner countries. Efficiency scores are calculated for each partnerships using a cost function that aims at assessing trade efficiency by minimizing imports compared to exports. Partnerships have been ranked according to the obtained efficiency scores. The most effective partnerships as ratio between imports and exports are those with Hungary and Austria

Suggested Citation

  • Daniela VIORICA, 2012. "An econometric efficiency analysis for Romania’s trade partnerships with the E.U. member countries," THE YEARBOOK OF THE "GH. ZANE" INSTITUTE OF ECONOMIC RESEARCHES, Gheorghe Zane Institute for Economic and Social Research ( from THE ROMANIAN ACADEMY, JASSY BRANCH), vol. 21(1), pages 89-94.
    • Handle: RePEc:zan:ygzier:v:21:y:2012:i:1:p:89-94
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    References listed on IDEAS

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    1. Fukunari Kimura & Hyun-Hoon Lee, 2006. "The Gravity Equation in International Trade in Services," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 142(1), pages 92-121, April.
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