A Tale of Parallel Integration Processes: A Gravity Analysis of EU Trade with Mediterranean and Central and Eastern European Countries

32 Pages Posted: 18 Nov 2005

See all articles by Anna Ferragina

Anna Ferragina

University Tor Vergata

Giorgia Giovannetti

Università di Firenze

Francesco Pastore

IZA Institute of Labor Economics; Seconda Università di Napoli - Dipartimento di Discipline Giuridiche ed Economiche Italiane Europee e Comparate

Date Written: October 2005

Abstract

Despite the EU emphasis on the 1995 Barcelona process, trade integration with the Mediterranean (MED) countries is still underdeveloped. To contrast the success of EU integration with MED countries and that with the new EU members, we compute the trade potential of these EU partners from 1995 to 2002 using an out-of-sample methodology. The coefficients are taken from different panel estimators of the gravity equation relative to intra-EU trade. Our analysis suggests the existence of sizeable, unexploited trade potential with both groups of partners, although the ratio of potential to actual trade with the MED countries is much larger (from 1.7 to 2.5 times), more dispersed and stable compared to that with the CEECs. Moreover, the potential tends to converge to actual trade in a much longer time in the case of MED countries.

Keywords: MED agreements, EU eastward enlargement, gravity equation, trade potential

JEL Classification: C23, F15, F17, P45, P52

Suggested Citation

Ferragina, Anna and Giovannetti, Giorgia and Pastore, Francesco and Pastore, Francesco, A Tale of Parallel Integration Processes: A Gravity Analysis of EU Trade with Mediterranean and Central and Eastern European Countries (October 2005). IZA Discussion Paper No. 1829, Available at SSRN: https://ssrn.com/abstract=851205 or http://dx.doi.org/10.2139/ssrn.851205

Anna Ferragina (Contact Author)

University Tor Vergata ( email )

Via di Tor Vergata
Rome, Lazio
Italy

Giorgia Giovannetti

Università di Firenze ( email )

Piazza di San Marco, 4
Florence, 50121
Italy

Francesco Pastore

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Seconda Università di Napoli - Dipartimento di Discipline Giuridiche ed Economiche Italiane Europee e Comparate ( email )

Via Antonio Vivaldi, 43
Caserta CE, Caserta 81100
Italy

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