Work detail

Gravity model and efficiency of trade between China and EU countries: Visegrad group, Germany, Austria

Author: Mgr. Radan Papoušek
Year: 2017 - summer
Leaders: doc. Ing. Vladimír Benáček CSc.
Work type: Finance, Financial Markets and Banking
Language: English
Pages: 96
Awards and prizes:
Abstract: The thesis analyzes bilateral trade between China and Visegrad group (V4),
Austria, and Germany. I use panel data of 23 countries across 1995-2015 to estimate
gravity model. I compare the countries among themselves (time-series view)
and analyze the development of the crucial variables employed in the model (crosssectional
view). Further, I estimate efficiency scores based on stochastic frontier
analysis (SFA). Connecting the findings from all three perspectives provides comprehensive
picture of the trade relations of the given countries with China. The
thesis reveals that accession to EU was beneficial for trade between V4 and China.
Global value chains (GVCs) also help to intensify the trade exchange between the
European countries and China. I find that Austria and Germany exhibit higher effi-
ciency scores for their exports mainly due to better positions in global value chains.
V4’s trade balance with China is very sensitive to the decisions of the international
companies that operate factories in the given countries. The analysis shows that
there is no disadvantage for the landlocked countries once they are in the custom
union with coastal countries. The importance of distance between the trading countries
is decreasing thanks to ICT and more efficient transport; Chinese exports are
further enhanced by state subsides. The results are robust to trade reporters as well
as to different assumption underlying SFA. The analysis could be improved by using
trade in value-added data, instead of measures of total flows, but are not available
at sufficient amount at the moment.


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