Modelling changes of foreign trade relations in the context of European Union expansion

Olha Poliakova () and Viktoriya Shlykova

The Problems of Economy, 2014, issue 1, 330_336

Abstract: The article analyses experience of foreign and domestic researchers on the use of gravity models for detecting factors of influence upon the foreign trade relations between countries. Using the EU example the authors tested the assumption that redistribution of influences of indicators upon volumes of international trade takes place along with expansion of integration associations. The article builds ten modifications of the gravity model for various groups of EU countries on the basis of data for 2003 and 2012 years with introduction of additional explanatory variables, including the fictitious ones. Volume of export of goods is selected as a dependent variable. The article identifies that the most stable in time factor of influence upon the volume of trade between countries is the sizes of their population, significance of GDP volumes and distances between partners reduces and belonging to "old" countries members of EU becomes an insignificant factor. The article proves that it is necessary to use additional variables in accordance with specific features of interrelations between countries at each stage of integration association functioning.

Keywords: foreign trade relations; gravity model; European Union; integration association (search for similar items in EconPapers)
Date: 2014
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