Volume and Comparative Advantage in East-West Trade
Dieter Schumacher and
Parvati Trübswetter ()
No 223, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research
The volume and commodity structure of EU trade with the transition countries in central and eastern Europe (CEECs) is estimated on the assumption that it will follow the pattern of trade among market economies. A gravity-type approach at the level of product groups is used, combining geography and factor-proportions theory of international trade. It is shown that there is still considerable potential for a further rise in East-West trade if the CEECs' national product is valued at purchasing power parities, instead of market exchange rates. Considering divergent income levels and distance between East and West, the EU's comparative advantages are in specialised-supplier, scale-intensive and science-based goods, whereas the CEECs' comparative advantages are in labour-intensive and resource-intensive goods. The intersectoral specialisation pattern will become "flatter" and the share of intra-industry trade will grow when the income differentials decrease.
Keywords: East-West trade; gravity model; comparative advantages (search for similar items in EconPapers)
JEL-codes: F10 F17 (search for similar items in EconPapers)
Pages: 28 p.
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4) Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:diw:diwwpp:dp223
Access Statistics for this paper
More papers in Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research Contact information at EDIRC.
Bibliographic data for series maintained by Bibliothek ().