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Trade Potential in an Enlarged European Union: A Recent Approach

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  • Maria Paula Fontoura
  • Enrique Martínez-Galán
  • Isabel Proença

Abstract

This paper aims to evaluate the trade potential of manufactured products between countries belonging to the EU in the threshold of its Eastern enlargement. For this purpose we use a Gravity model which is estimated with a Poisson Pseudo-Maximum Likelihood Method. We extend the specification of the gravity model in order to capture bilateral trade specificities between groups of countries of the enlarged EU, allowing to test the statistical significance of these inter-groups’ trade potential. In addition, it includes the Commodity Composition of Trade. The estimated coefficients are used to project exports of each country. We conclude that in 2002 the CEEC as a group had exhausted their export potentialities to the enlarged EU, whereas the same does not apply to its imports from the EU members.

Suggested Citation

  • Maria Paula Fontoura & Enrique Martínez-Galán & Isabel Proença, 2006. "Trade Potential in an Enlarged European Union: A Recent Approach," Working Papers Department of Economics 2006/08, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    • Handle: RePEc:ise:isegwp:wp82006
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    Cited by:

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    3. Hong Chen & Lanieta Rauqeuqe & Shiu Raj Singh & Yiqun Wu & Yongzheng Yang, 2019. "Pacific Island Countries: In Search of a Trade Strategy," Journal of Banking and Financial Economics, University of Warsaw, Faculty of Management, vol. 2(12), pages 56-80, September.

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    More about this item

    Keywords

    European Union; CEEC; Gravity Model; Commodity Composition of Trade; Poisson Pseudo-Maximum Likelihood Estimator; Trade Potential.;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation

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