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WP2/18 SEARCH WORKING PAPER
Trade activity between the EU and its
neighboring countries: trends and potential
Kallioras Dimitris, Pinna Anna Maria
November 2013
Trade activity between the EU and its neighboring countries: trends and potential•
* **
Kallioras Dimitris Pinna Anna Maria
*
University of Thessaly, Department of Planning and Regional Development; SEED Center,
dkallior@uth.gr
** University of Cagliari, Department of Economics; CRENoS, ampinna@unica.it
Abstract
The objective of the paper is to examine whether trade activity intensifies over time as the outcome
of signed bilateral trade agreements. Focusing on (the trade component of) the European
Neighborhood Policy, the paper conducts an in-depth study of trade activity between the EU and its
neighboring countries, attempting to offer a detailed analysis in terms of trade patterns and to
investigate whether proximity is combined with higher trade flows, within the framework of a free
trade agreement. The analysis utilizes data derived from BACI database and covers the period from
1995 to 2011. The findings of the paper indicate that there is a lot of potential for the expansion of
trade activity between the EU and its neighboring countries and accentuate the crucial determinants
in this direction.
Key-words: EU, ENP, neighboring countries, trade, trends, potential
1. Introduction
Neighboring countries provide the easiest market access for the majority of tradable goods as trade
costs are, ceteris paribus, lower over small distances (Leamer Levinsohn 1995; Evenett Keller
2002). Furthermore, when one count
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