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Determinants of trade partner concentration: An analysis for European countries

Author

Listed:
  • António Afonso
  • José Alves
  • Lucas Menescal
  • Sofia Monteiro

Abstract

After computing the Gini and Herfindahl-Hirschman indexes for exports and imports partner concentration for a set of 31 European countries between 1995 and 2023, we analyse the role of macroeconomic, institutional and uncertainty effects on the partner concentration (diversification) of exports and imports. From our analysis, we disentangle different effects, namely that while global GDP leads to an increase in concentration in both exports and imports, internal rates of return increase exports diversification, reducing it for imports. Additionally, European uncertainty reduces the concentration of the product countries’ origin/destination for imports and exports, respectively. Our results provide a comprehensive set of results that enable public authorities and firms to minimize their risks when trading with the exterior.

Suggested Citation

  • António Afonso & José Alves & Lucas Menescal & Sofia Monteiro, 2024. "Determinants of trade partner concentration: An analysis for European countries," Working Papers REM 2024/0356, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.
    • Handle: RePEc:ise:remwps:wp03562024
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    More about this item

    Keywords

    Exports; Imports; Gini index; Herfindahl-Hirschman index; Determinants of concentration.;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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