The Role of Regional Economic Integrations for Trade Margins: A Case of Croatia

Zbornik radova Ekonomskog fakulteta u Rijeci, časopis za ekonomsku teoriju i praksu - Proceedings of Rijeka Faculty of Economics, Journal of Economics and Business, Vol. 34, No. 1, 2016, pp. 11-41

31 Pages Posted: 30 Jan 2017

See all articles by Katja Zajc

Katja Zajc

University of Ljubljana - Faculty of Economics

Črt Kostevc

University of Ljubljana - Faculty of Economics

Vinko Zaninović

University of Rijeka, Faculty of Economics and Business

Multiple version iconThere are 2 versions of this paper

Date Written: July 27, 2016

Abstract

The goal of this investigation is to research the development of intensive and extensive trade margins on product-country level data for Croatia during the period 2000–2012. Hypothesis of our paper is that RTAs-induced trade liberalization will have heterogeneous effects on particular product groups with indirect implications on national welfare. Static and dynamic gravity trade models are used on panel data accounting for over 90% of total trade during the observed period. Estimations of the trade gravity model and trade margins showed that while SAA and CEFTA arrangements positively affected different measures of intensive and extensive trade margins, specially exports and imports of consumption products, effects on trade in intermediate and capital goods were relatively subdued. This suggests a tendency for market-seeking rather than efficiency-seeking behaviour of Croatia’s trade sector. When comparing the results for two trade agreements using dynamic model, we find that SAA primarily affected trade in consumption goods while effects of CEFTA are more evenly dispersed across different product groups. Main conclusion of the paper is that Croatia’s policy makers should try to keep the preferential status of Croatia within the CEFTA market in the medium term, focusing on the Croatian economy.

Keywords: trade margins, gravity model, free trade agreements, Croatia

JEL Classification: F10, F12, F15

Suggested Citation

Zajc, Katja and Kostevc, Crt and Zaninović, Vinko, The Role of Regional Economic Integrations for Trade Margins: A Case of Croatia (July 27, 2016). Zbornik radova Ekonomskog fakulteta u Rijeci, časopis za ekonomsku teoriju i praksu - Proceedings of Rijeka Faculty of Economics, Journal of Economics and Business, Vol. 34, No. 1, 2016, pp. 11-41, Available at SSRN: https://ssrn.com/abstract=2908074

Katja Zajc (Contact Author)

University of Ljubljana - Faculty of Economics ( email )

Kardeljeva ploscad 17
Ljubljana, 1000
Slovenia

Crt Kostevc

University of Ljubljana - Faculty of Economics ( email )

Kardeljeva ploscad 17
Ljubljana, 1000
Slovenia

Vinko Zaninović

University of Rijeka, Faculty of Economics and Business ( email )

Ivana Filipovića 4
Rijeka, 51000
Croatia

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