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The Determinants of EU Processing Trade

Hartmut Egger () and Peter H. Egger ()

The World Economy, 2005, vol. 28, issue 2, pages 147-168

Abstract: This paper assesses the determinants of European outward and inward processing trade. Thereby, it distinguishes between size, relative factor endowment, (other) cost factors and infrastructure variables. Using a large panel of bilateral processing trade flows of the EU12 countries at the aggregate level over the period 1988-1999, we find that infrastructure variables, relative factor endowments and other cost variables are important determinants for the EU's outward processing trade. Costs also play a key role for the EU's inward processing trade. Copyright Blackwell Publishing Ltd 2005.

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Handle: RePEc:bla:worlde:v:28:y:2005:i:2:p:147-168