A Gravity Approach to Modelling International Trade in South-Eastern Europe and the Commonwealth of Independent States: The Role of Geography, Policy and Institutions

Oxana Babecká-Kucharčuková, Jan Babecký and Martin Raiser ()

Working Papers from Czech National Bank, Research and Statistics Department

Abstract: Since the beginning of market reforms in 1989, the countries of South-Eastern Europe (SEE) and the Commonwealth of Independent States (CIS) have been trading significantly less with the world economy than those Central and Eastern European (CEE) countries which later joined the EU. To explain why this is the case, a number of hypotheses have been proposed in the literature. The key novelty of our study consists in a simultaneous assessment of the contribution to trade of geographical, policy and institutional factors during the EU pre-accession period (1997-–2004). An augmented gravity model is proposed and estimated for a reference group of 82 countries, employing the Poisson and Tobit estimation techniques. We find that low quality of economic institutions in the SEE and CIS countries accounted for a considerable proportion of their below-potential international trade. We perform policy simulations using institutional data up to 2008 to identify channels for increasing the international trade of the SEE and CIS countries.

Keywords: Gravity model of trade; Poisson estimator; Tobit estimator; transition economies. (search for similar items in EconPapers)
JEL-codes: F13 F15 P33 (search for similar items in EconPapers)
Date: 2010-11
New Economics Papers: this item is included in nep-cis, nep-int and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Gravity Approach for Modelling International Trade in South-Eastern Europe and the Commonwealth of Independent States: The Role of Geography, Policy and Institutions (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:cnb:wpaper:2010/04

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