European integration and EU eastward enlargement process in international trade: using a gravity approach for exploring bilateral trade flows

The paper is going to give an overview of the comparative evaluation of the Baltic Sea region countries (Sweden, Denmark, Finland, Norway, Germany, Russia, Poland, Estonia, Latvia and Lithuania) competitiveness based on various methodological approaches ranking countries according to their level of international competitiveness. The study mainly bases on the data of the United States Agency for International Development (USAID), Harvard Institute for International Development (HIID), International Institute for Management Development (IMD) and national and international statistical authorities. Factor analysis as a data reduction method is used in order to elaborate generalized indicators (factors) of a country's competitiveness level and to compare the factor analysis based rankings of the Baltic Sea region economies with the ranking results based on the other methodological approaches (HIID methodology for evaluation of the economies' in transition competitiveness, World Competitiveness Yearbook (WCY) methodology). According to the results of using factor analysis, the main generalized indicators that explain a country's competitiveness level are the size of economy and level of economic development, which explain more than 50% of variation of initial indicators of a country's macroeconomic environment. Other generalized indicators could be interpreted as the factors that characterize development of infrastructure and/or human resources, and also openness of economy. Based on the results of the study, it is possible to conclude that the Baltic Sea region countries have good competitive position among the leading world economies and the economies in transition. The countries around the Baltic Sea have historical and cultural traditions for developing trade relations and economic cooperation. The development of mutually beneficial economic co-operation between the capital abundant countries such as Germany and the Scandinavian countries and the transitional countries of the region, which provide the possibilities of entrance into the new markets and also rather cheap and qualified labour force, has positively influenced economic environment of all Baltic Sea region countries. For the Baltic economies in transition, the regional co-operation has created conditions that support their rapid economic restructuring, development of infrastructure and human capital, and quick rise of competitiveness. To sum up, the Baltic Sea region has good potential for competitive economic development due to its favourable location between East and West and dynamic interdependence between transition and integration, stimulating both processes.

Social Consequences of Transition and European Integration Processes in the Baltic States

The paper focuses on studying economic integration of the countries that are involved in the EU eastward enlargement process giving emphasis on international trade. The main feature characterizing the EU eastward enlargement processes is integration of national economies with different historical backgrounds and structures. Regionalism is an important issue in the policy agenda influencing adjustment processes with the EU enlargement of the current members (EU15) and the candidate countries (CC12). The regional integration effects as the deviations from the volume of trade predicted by the baseline gravity model are analyzed in the paper. The empirical results of the study allow us to conclude that the behaviour of bilateral trade flows within the countries involved in the EU eastward enlargement accords to the normal rules of gravitation, having statistically significant spatial biases caused by the trade relations between the Baltic Rim countries (the BR bias) and the border countries (the border bias). The results of the study allow us to prove the preposition that lagged bilateral trade flows are still significant in determining current trade. Past trade linkages adjust rather slowly to the new conditions of the EU eastward enlargement. The Baltic Rim countries? bilateral trade flows are among the countries involved in the EU eastward enlargement on average 2 times larger than trade flows outside the region after controlling for traditional gravitational forces and other regional dummies. The evidence of cross-border trade relations and Baltic Rim regional cooperation is stronger in the current EU members than in the candidate countries. The countries around the Baltic Sea benefit from the integration due to the synergetic effect of non-homogenous entities ? the countries on different economic levels and with different historical ties. The lessons of the Baltic Sea region in integrating countries with different economic and political backgrounds are valuable in supporting the EU eastward enlargement and the reintegration of the new member countries into Europe. Keywords: EU enlargement, the Baltic Sea Region, integration, international trade, gravity models JEL: F15, C5, R15

Regional income inequality and convergence processes in the EU-25

This paper deals with the development of disparities in regional per capita GDP and convergence processes in the enlarged EU. A cross-section of 861 regions is analysed for the period from 1995 to 2003. Firstly, we apply Theil's index of inequality in order to show the development of between- and within-country disparities. Secondly, we conduct a formal Ø-convergence analysis, taking into account the effects of spatial dependence and controlling for national effects. The analyses show that poorer regions mainly situated in the European periphery have tended to grow faster than the relatively rich regions in the centre of Europe. However, the convergence process has been driven mainly by national factors. In the course of this process, regional disparities within the new member countries have actually increased. Furthermore, we find that spatial growth spillovers lose relevance when crossing a national border. Thus, border impediments still matter for the intensity of economic cross-border integration in the EU. --regional inequality,convergence,EU-25,regional interactions,spatial econometrics

Regional Income Inequality and Convergence Processes in the EU-25

The paper investigates income inequality and convergence among the EU-25 countries and their regions at NUTS 3 (Nomenclature of Territorial Units for Statistics) level during the period 1995-2002. We measure the level of income inequality and its decomposition distinguishing the between and within country inequality as the components of the overall income inequality of EU-25, EU-15 and the new member states (NMS) of the EU recent enlargement in May 2004. In order to assess the inequality in living standards GDP in purchasing power standards (PPS) is used. In the empirical analysis of the convergence processes we consider the effects of interactions among neighbouring regions implementing spatial econometrics techniques. The estimation results are sensitive to the control for national effects. While the EU-25 and the EU-15 experienced a slow but significant process of absolute convergence there is no evidence found for regional convergence when national effects are considered. In the NMS the process of conditional convergence across regions even turns out to be significantly negative. This indicates that there were some divergence tendencies in the NMS during the period of 1995 – 2002.

The effect of anticipated and experienced regret and pride on investors' future selling decisions : [Version November 2012]

This paper investigates the effect of anticipated/experienced regret and pride on individual investors’ decisions to hold or sell a winning or losing investment, in the form of the disposition effect. As expected the results suggest that in the loss domain, low anticipated regret predicts a greater probability of selling a losing investment. While in the gain domain, high anticipated pride indicates a greater probability of selling a winning investment. The effects of high experienced regret/pride on the selling probability are found as well. An unexpected finding is that regret (pride) seems to be not only relevant for the loss (gain) domain, but also for the gain (loss) domain. In addition, this paper presents evidence of interconnectedness between anticipated and experienced emotions. The authors discuss the implications of these findings and possible avenues for further research

Variability of worked examples and transfer of geometrical problem-solving skills : a cognitive-load approach

Four computer-based training strategies for geometrical problem solving in the domain of computer numerically controlled machinery programming were studied with regard to their effects on training performance, transfer performance, and cognitive load. A low- and a high-variability conventional condition, in which conventional practice problems had to be solved (followed by worked examples), were compared with a low- and a high-variability worked condition, in which worked examples had to be studied. Results showed that students who studied worked examples gained most from high-variability examples, invested less time and mental effort in practice, and attained better and less effort-demanding transfer performance than students who first attempted to solve conventional problems and then studied work examples

Extending dynamic segmentation with lead generation: A latent class Markov analysis of financial product portfolios

A recent development in marketing research concerns the incorporation of dynamics in consumer segmentation.This paper extends the latent class Markov model, a suitable technique for conducting dynamic segmentation, in order to facilitate lead generation.We demonstrate the application of the latent Markov model for these purposes using a database containing information on the ownership of twelve financial products and demographics for explaining (changes in) consumer product portfolios.Data were collected in four bi-yearly measurement waves in which a total of 7676 households participated.The proposed latent class Markov model defines dynamic segments on the basis of consumer product portfolios and shows the relationship between the dynamic segments and demographics.The paper demonstrates that the dynamic segmentation resulting from the latent class Markov model is applicable for lead generation.market segmentation;Markov chains;marketing;demography;measurement

Country and Consumer Segmentation: Multi-Level Latent Class Analysis of Financial Product Ownership

The financial services sector has internationalized over the last few decades.Important differences and similarities in financial behavior can be anticipated between both consumers within a particular country and those living in different countries.For companies in this market, the appropriate choice between strategic options and the resulting international performance may critically depend on the cross-national demand structure for the various financial products.Insight into country segments and international consumer segments based on domain-specific behavioral variables will therefore be of key strategic importance.We present a multi-level latent class framework for obtaining simultaneously such country and consumer segments.In an empirical study we apply this methodology to data on ownership of eight financial products.Information is available for fifteen European countries, with a sample size of about 1000 consumers per country.We find that both country segments and consumer segments are highly interpretable.Furthermore, consumer segmentation is related to demographic variables such as age and income.Our conclusions feature implications, both academic and managerial, and directions for future research.market segmentation;finance

Why do investors sell losers? How adaptation to losses affects future capitulation decisions

According to disposition effect theory, people hold losing investments too long. However, many investors eventually sell at a loss, and little is known about which psychological factors contribute to these capitulation decisions. This study integrates prospect theory, utility maximization theory, and theory on reference point adaptation to argue that the combination of a negative expectation about an investment’s future performance and a low level of adaptation to previous losses leads to a greater capitulation probability. The test of this hypothesis in a dynamic experimental setting reveals that a larger total loss and longer time spent in a losing position lead to downward adaptations of the reference point. Negative expectations about future investment performance lead to a greater capitulation probability. Consistent with the theoretical framework, empirical evidence supports the relevance of the interaction between adaptation and expectation as a determinant of capitulation decisions. Keywords: Investments , Adaptation , Reference Point , Capitulation , Selling Decisions , Disposition Effect , Financial Markets JEL Classification: D91, D03, D8