Trade Specialisation and Economic Convergence: Evidence from Two Eastern European Countries
University of Orleans; Université d'Évry - Centre D'Etudes des Politiques Economiques et de L'Emploi (EPEE); Université Paris I Panthéon-Sorbonne - Equipe Universitaire de Recherche en Economie Quantitative (EUREQUA); Institute for the Study of Labor (IZA); CESifo (Center for Economic Studies and Ifo Institute)
Guglielmo Maria Caporale
Brunel University London - Department of Economics and Finance; London South Bank University; CESifo (Center for Economic Studies and Ifo Institute)
Academy of Economic Studies; Université Paris I Panthéon-Sorbonne - Centre Maison des Sciences Economiques
Bucharest Academy of Economic Studies; CES Sorbonne University
June 14, 2009
William Davidson Institute Working Paper No. 959
This paper analyses trade specialisation dynamics in two Eastern European countries (Romania and Bulgaria - EEC-2) vis-à-vis the core EU member states (EU-15) over the period 1990-2006. Specifically, we focus on whether there is a shift towards intra-industry trade leading to economic convergence and technological catch-up. We use recently developed static (FEM, REM and FEVD) and dynamic (GMM) panel data methods which take into account possible heterogeneity. Our empirical results indicate that intra-industry trade has indeed increased, but it is of the vertical rather than the horizontal type, resulting in complementary rather than competitive production patterns.
Number of Pages in PDF File: 32
Keywords: gravity models, panel data models, trade specialisation, comparative advantage
JEL Classification: F13, F15, C23
Date posted: August 3, 2010
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