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Title: What determines sectoral trade in the enlarged EU?
Authors: Marques, Helena
Metcalf, Hugh
Keywords: gravity model
human capital
trade
EU enlargement
Issue Date: Sep-2003
Abstract: In this paper we estimate a sectoral gravity model for trade within a heterogeneous trade bloc, the enlarged EU, comprised of a high-income group (wealthiest EU), a middle-income group (Greece, Portugal and Spain), and a low-income group (acceding Central and Eastern European countries). The estimation was conducted on sectors with different degrees of scale economies and skill-intensities in the presence of transport costs. The results offer support for the call to incorporate trade theories based on both endowments and scale economies. In addition, whilst integrating poorer countries is beneficial for all of the participants in the bloc, there is still a role for redistribution policy. However, the EU’s Regional Policy, for example, should not be individual initiatives but should be a mix of policies, focussing on both income and education/skills, together with infrastructure development.
Description: Economics Research Paper, no. 03-08
URI: https://dspace.lboro.ac.uk/2134/186
Appears in Collections:Working Papers (Economics)

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