Agricultural and food trade in European Union countries, 1963‐2000:a gravity equation approach

Abstract

The proliferation of regional trade agreements in the last decades of the 20th century has intensified the debate about the different processes of regional integration. This study contributes to this debate by analysing the principal determinants of the growth in trade flows of the countries making up the European Union. The work analyses EU agri‐food trade from a disaggregated perspective, by products, imports and exports, from 1963 to 2000. An extended gravity equation model is estimated employing Prais‐ Weistein estimation and fixed effects in order to improve on the results reported in previous studies. The results of the present study show that in EU countries the growth of per capita income stimulated exports and reduced imports. Specifically, its exports were positively influenced by the presence of the home market effect, while its imports were strongly influenced by the effects of the liberalisation of intra‐EU trade, as also occurred in the case of intra‐EU trade flows.International Agricultural Trade, Economic History of the European Union, Gravity equation