CEECS integration into regional production networks. Trade effects of EU-accesion

Abstract

We estimate a gravity model that incorporates the extensive margin of trade and accounts for firm heterogeneity to evaluate the effect of the EU-accession on CEECs trade in intermediates and final goods for the period 1999-2009. The importance of production networks is captured by including imports of intermediates as a determinant of a country’s exports of final goods. We find a positive and significant effect of the EU-accession on CEECs trade in intermediate and final goods. Hence, the elimination of “behind the border” trade barriers has a positive impact on increasing not only trade volumes but also trade varieties.gravity equation; panel data; production networks; economic integration; trade flows.