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Trade Effects of Eurasian Economic Union and Global Production Sharing: A Gravity Analysis

Author

Listed:
  • Sanjeev Vasudevan

    (Assistant Professor, Madras School of Economics, Chennai, Tamil Nadu, India, 600025)

  • Suresh Babu Manalaya

    (Professor and Director, Madras Institute of Department Studies, Chennai, Tamil Nadu, India, 600020.)

Abstract

This study examines the Eurasian Economic Union's trade effects, focusing on global production sharing. We measure the extent of global production sharing with the exports of parts and components. With a panel dataset of disaggregated bilateral flows of 5 members and 28 partners, we estimate an augmented gravity model for 2010-17 using the Hausman and Taylor Estimator. The study has two important findings. First, there are significant trade diversion effects in final goods, parts, and components. Second, the formation of the economic union results in declining intra-bloc exports. Besides, we find that market size, inter-country differentials of income, business-friendly climate, and cultural similarities are the other significant determinants of bilateral trade.

Suggested Citation

  • Sanjeev Vasudevan & Suresh Babu Manalaya, 2024. "Trade Effects of Eurasian Economic Union and Global Production Sharing: A Gravity Analysis," Working Papers 2024-272, Madras School of Economics,Chennai,India.
    • Handle: RePEc:mad:wpaper:2024-272
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    References listed on IDEAS

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    More about this item

    Keywords

    Eurasian Economic Union; Trade Effects; Global Production Sharing; Parts and Components Trade; Gravity Model; Hausman and Taylor Estimator;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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