Trade Effects of Eurasian Economic Union and Global Production Sharing: A Gravity Analysis

Sanjeev Vasudevan () and Suresh Babu Manalaya
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Sanjeev Vasudevan: Assistant Professor, Madras School of Economics, Chennai, Tamil Nadu, India, 600025
Suresh Babu Manalaya: Professor and Director, Madras Institute of Department Studies, Chennai, Tamil Nadu, India, 600020.

Working Papers from Madras School of Economics,Chennai,India

Abstract: This study examines the Eurasian Economic Union's trade effects, focusing on global production sharing. We measure the extent of global production sharing with the exports of parts and components. With a panel dataset of disaggregated bilateral flows of 5 members and 28 partners, we estimate an augmented gravity model for 2010-17 using the Hausman and Taylor Estimator. The study has two important findings. First, there are significant trade diversion effects in final goods, parts, and components. Second, the formation of the economic union results in declining intra-bloc exports. Besides, we find that market size, inter-country differentials of income, business-friendly climate, and cultural similarities are the other significant determinants of bilateral trade.

Keywords: Eurasian Economic Union; Trade Effects; Global Production Sharing; Parts and Components Trade; Gravity Model; Hausman and Taylor Estimator (search for similar items in EconPapers)
JEL-codes: F10 F14 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2024-12
New Economics Papers: this item is included in nep-int
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