APPLICATION OF THE GRAVITY MODEL IN THE ANALYSIS OF FOREIGN TRADE BETWEEN SERBIA AND EU COUNTRIES; LESSONS LEARNED FROM THE EXPERIENCE OF THE REPUBLIC OF CROATIA

Vladimir Ristanovic (), Dinko Primorac () and Aleksandra Tosovic-Stevanovic ()
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Vladimir Ristanovic: Faculty of Business Economics and Entrepreneurship, Belgrade, Serbia
Dinko Primorac: University North, Varazdin, Croatia
Aleksandra Tosovic-Stevanovic: Faculty of Business Economics and Entrepreneurship, Belgrade, Serbia

Economic Thought and Practice, 2020, vol. 29, issue 2, 579-600

Abstract: Compliance with European rules implies the transformation of the economy and enterprises in terms of production and export of goods. Regional integrations impose changes in the production structure. The choice of activity can be successfully made and assessed by using Newton's law of gravity. The basic elements of the gravity model, such as GDP, population and distance, are used in the article. We analyze the trade flow in the period from 2001 to 2018. Serbia's trade with other EU member states is evaluated, taking into account the experience of Croatia. The results of the gravity model indicate that trade with more distant EU member states is less conducted. Furthermore, trade is conducted more with neighboring EU member states, which is the basic principle of the gravity model. There are exceptions when it comes to trading with developed EU economies even though they are remote. The aim of the article is to analyze the structure of Serbia's trade with EU member states. The idea is to use the experience of the Republic of Croatia until EU accession. The gravity model will enable us to evaluate the direction of Serbian trade in the EU accession process.

Keywords: European Union; Croatia; gravity model; Serbia; trade exchange (search for similar items in EconPapers)
JEL-codes: F10 F15 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.17818/EMIP/2020/2.13

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