Determinants of Kosovo Trade: A Gravity Model Approach

Peci Florin, Mario Holzner and Kutllovci Enver
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Peci Florin: Customs of Kosovo-Prishtine
Kutllovci Enver: Faculty of Economics, University of Prishtine

South East European Journal of Economics and Business, 2010, vol. 5, issue 2, 33-41

Abstract: This study attempts to identify and quantify the factors affecting bilateral trade flows between Kosovo and its trading partner countries using a gravity model. The econometric model is estimated based on both economic and institutional aspects. The results show that family networking with Kosovo emigrants determines to a large extent both exports and imports, while corruption and informality in the partner country seem not to be issues with regard to Kosovo imports. This comes as a surprise given the initial assumption that Kosovo trades more with countries that have a high share of corruption because of informal networks between small and medium enterprises (SME) predominant in Kosovo. The regional CEFTA free trade agreement has a positive effect on both Kosovo imports and exports. Key words: international trade, gravity model, informality, Kosovo

Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:seejeb:v:5:y:2010:i:2:p:33-41:n:3

DOI: 10.2478/v10033-010-0013-4

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