On the patterns of trade convergence in European transition countries

Oleksandr Tkachuk and Denis Popko

MPRA Paper from University Library of Munich, Germany

Abstract: In current study we analyze the convergence of trade between Central and Eastern European countries (CEECs) and European Union (EU) during the period from 1984 to 2004. In our extension of the theoretical framework of Helpman, Melitz and Rubinstein (2005) with heterogeneous firms we discuss the influence of economic fundamentals and trade cost on extensive and intensive margins of trade. Then, we use gravity model of trade to calculate potentials for CEECs trade with EU-15 countries. As a result, we develop convergence measures for CEECs exports and imports trade flows with EU-15. Moreover, we provide decomposition of trade flows on extensive and intensive margins, and construct convergence measures for each of the trade components. Finally, we analyze the mechanics of trade convergence process in selected CEECs. Current paper contributes to better understanding of trade convergence patterns in European transition countries, providing policy-makers in transition economies with useful insights on the role of different trade components in the convergence process.

Keywords: trade convergence; gravity model; extensive and intensive margins; Hummels-Klenow decomposition (search for similar items in EconPapers)
JEL-codes: C23 F15 F17 (search for similar items in EconPapers)
Date: 2007-02
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Working Paper: On the Patterns of Trade Convergence in European Transition Countries (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:14109

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