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What determines sectoral trade in the enlarged EU?

Lookup NU author(s): Helena Marques, Dr Hugh Metcalf

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Abstract

In this paper, we estimate a sectoral gravity model for trade within a heterogeneous trade bloc, the enlarged EU, comprised of a high-income group (wealthiest EU), a middle-income group (Greece, Portugal and Spain), and a low-income group (new Central and Eastern European member countries). The estimation was conducted on sectors with different degrees of scale economies and skill-intensities in the presence of transport costs. The results offer support for the call to incorporate trade theories based on both endowments and scale economies. In addition, whilst integrating poorer countries is beneficial for all of the participants in the bloc, there is still a role for a redistribution policy, such as the EU's Regional Policy, which should comprise a mix of policies, focusing on both income and education/skills, together with infrastructure development. © Blackwell Publishing Ltd 2005.

Publication metadata

Author(s): Marques H, Metcalf H

Publication type: Article

Publication status: Published

Journal: Review of Development Economics

Year: 2005

Volume: 9

Issue: 2

Pages: 197-231

ISSN (print): 1363-6669

ISSN (electronic): 1467-9361

Publisher: Wiley-Blackwell Publishing Ltd.

URL: http://dx.doi.org/10.1111/j.1467-9361.2005.00272.x

DOI: 10.1111/j.1467-9361.2005.00272.x

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