Export Potential, Uncertainty, and Regional Integration: Choice of Trade Policy for Ukraine

32 Pages Posted: 3 Jul 2013

See all articles by Oleksandr Shepotylo

Oleksandr Shepotylo

Aston University - Aston Business School

Date Written: July 2, 2013

Abstract

This paper develops a methodology of evaluating trade potential under different integration scenarios using a panel of disaggregated exports. The methodology is applied to compare trade potential of Ukraine under three counterfactual scenarios: joining CU, signing FTA with EU, and joining EU. The analysis indicates that the current trade policy of Ukraine creates high trade policy uncertainty, resulting in underperformance of exports to CU and EU countries. The expected long run gains in Ukrainian exports to all countries under the CU scenario are equal to 17.9 percent over the export level in 2009-2011, under the FTA EU scenario – 36 percent, and under the full EU scenario – 46.1 percent.

Keywords: gravity model, EU enlargement, Ukraine, customs union, heterogeneous firms, trade policy

JEL Classification: C33, F12, F17, P33

Suggested Citation

Shepotylo, Oleksandr, Export Potential, Uncertainty, and Regional Integration: Choice of Trade Policy for Ukraine (July 2, 2013). Available at SSRN: https://ssrn.com/abstract=2288652 or http://dx.doi.org/10.2139/ssrn.2288652

Oleksandr Shepotylo (Contact Author)

Aston University - Aston Business School ( email )

Aston Triangle
Birmingham, B47ET
United Kingdom

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