Hub-and-Spoke or else? Free trade agreements in the 'enlarged' European Union

Luca De Benedictis (), Roberta de Santis () and Claudio Vicarelli

European Journal of Comparative Economics, 2005, vol. 2, issue 2, 245-260

Abstract: The object of this paper is to estimate if and how the Central European Free Trade Agreement (CEFTA) and the Baltic Free Trade Agreement (BFTA) exerted a significant impact on intra-European trade, effectively reducing the influence of the European Association Agreements (EAs) in shaping the European trade structure as a hub-and-spoke system - with the EU15 being the hub and the CEECs the spoke. This paper analyses bilateral trade flows between eight CEECs and EU-23. We estimate a gravity equation using a system GMM dynamic panel data approach. Results support the assumptions that gravity forces and "persistence effects" matter. With respect to the effect of free trade agreements, evidence is found that Free trade agreements between CEECs matter: There is evidence that the presence of intra-periphery agreements helped expand intra-periphery trade and limited the emergence of a "hub-and-spoke" relationship between CEECs and EU. This results have important policy implications for the trade strategy of "future" EU members of the Southeastern European Countries as well as of the Southern Mediterranean Countries. According to the empirical results, these countries should move towards a regional free-trade area as exemplified by the CEFTA and the BFTA to avoid "hub-and-spoke" effects.

Keywords: Trade flows; regional integration; EU eastward enlargement; gravity model; dynamic panel data (search for similar items in EconPapers)
JEL-codes: C13 C23 F13 F15 (search for similar items in EconPapers)
Date: 2005
References: Add references at CitEc
Citations: View citations in EconPapers (34)

Downloads: (external link)
https://ejce.liuc.it/18242979200502/182429792005020205.pdf (application/pdf)

Related works:
Working Paper: Hub-and-Spoke or else? Free trade agreements in the “enlarged” European Union (2005)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:liu:liucej:v:2:y:2005:i:2:p:245-260

Access Statistics for this article

European Journal of Comparative Economics is currently edited by Matteo Migheli, Giovanni Ramello, Koji Domon, Peter Grajzl, David M. Kemme, Marcello Signorelli and Richard Watt

More articles in European Journal of Comparative Economics from Cattaneo University (LIUC) Contact information at EDIRC.
Bibliographic data for series maintained by Laura Ballestra ().