Template-Type: ReDIF-Paper 1.0
Author-Name: Marie Stack 
Author-Name: Eric Pentecost
Title: A Gravity Model Approach to Estimating Prospective Trade Gains in the EU Accession and Associated Countries
Abstract: Examining the trade prospects for the new European Union (EU) member states and the EU associated partner countries is an important issue in the context of European eastward
enlargement and greater economic integration with its immediate neighbours. An out-ofsample approach to projecting trade volumes for twenty countries of interest is adopted using a gravity equation for a panel data set of bilateral export flows from twelve EU
countries to twenty OECD trading partners over the 1992-2003 period. The potential trade volumes are calculated from a gravity model of new trade theory (NTT)
determinants. The selected twenty countries’ prospects for further trade integration vis-à-vis the EU can be gauged by expressing the trade volume projections as a ratio of actual
trade volumes for each pair of countries. The projected trade ratios for the ten new member states are found to be multiples of actual 2003 levels, indicating that trade
expansion looks set to continue. Near unity values, however, are more frequent among the Mediterranean countries, indicating fewer opportunities for further trade integration
with the EU.
File-URL: http://www.ntu.ac.uk/__data/assets/pdf_file/0013/311413/a-gravity-model-approach-to-estimating.pdf
File-Format: Application/pdf
File-Function: First version, 2011
Creation-Date: 2011-03
Classification-JEL: F14, F15, C23
Keywords: Panel data, Gravity model, Trade integration
Handle: RePEc:nbs:wpaper:2010/11