Work detail

Analysis of the effects of EU membershipon trade flows of member countries. Implications for new members and forattempts to leave the EU

Author: Bc. Timur Barotov
Year: 2020 - summer
Leaders: Ing. Vilém Semerák M.A., Ph.D.
Consultants:
Work type: Bachelors
Language: English
Pages: 78
Awards and prizes:
Link: https://is.cuni.cz/webapps/zzp/detail/214066/
Abstract: This thesis provides an answer on a question whether does a country benefit
from being a member of European Union from an international trade flows perspective. For estimation purposes, the data set was constructed of 195 nations
listed in the appendix, for period 1988 to 2018. Gravity model was employed
in the estimation process with accordance to the newest estimation standards,
where the two methods employed in this thesis are Fixed Effects model as
in most similarly oriented papers and Poisson Pseudo-Maximum-Likelihood to
account for any possible biases caused by zero observations. Main theoretical
concept for estimating EU effect is Viner’s trade diversion and trade creation
effects. Moreover, the thesis gives a hint on whether the benefits of participating in European Union are immediate or are expected to increase with a time in
the advanced stages of integration. The results of this study show statistically
significant and positive effect of EU membership on nation’s international trade
flows, yielded both by Fixed Effects and Poisson Pseudo-Maximum-Likelihood
models. Interestingly, the EU effect proved to be favouring more exporting
nations than importing ones. Results also provided evidence of trade creation
due to EU membership. Additionally, the results suggest that aforementioned
integration benefits are indeed growing with the time and it is not one-off process. Specifically, after five years threshold the benefits of integration were still
present.
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