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What determines sectoral trade in the enlarged EU?
preprint
posted on 2005-07-14, 16:24 authored by Helena Marques, Hugh MetcalfIn 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.
History
School
- Business and Economics
Department
- Economics
Pages
231191 bytesPublication date
2003-09Notes
Economics Research Paper, no. 03-08Language
- en