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Trade Specialisation and Economic Convergence: Evidence fro Two Eastern European Countries

By Christophe Rault, Guglielmo Maria Caporale, Robert Sova and Anamaria Sova


This paper analyses trade specialisation dynamics in two Eastern European countries (Romania and Bulgaria - EEC-2) vis-à-vis the core EU member states (EU-15) over the period 1990-2006. Specifically, we focus on whether there is a shift towards intra-industry trade leading to economic convergence and technological catch-up. We use recently developed static (FEM, REM and FEVD) and dynamic (GMM) panel data methods which take into account possible heterogeneity. Our empirical results indicate that intra-industry trade has indeed increased, but it is of the vertical rather than the horizontal type, resulting in complementary rather than competitive production patterns

Topics: Gravity Models, Panel Data Models, Trade Specialisation, Comparative Advantage
Year: 2009
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