engleski

The gravity approach to modelling international trade of the Republic of Croatia

International trade plays a very important role in the economic development of a country. Examining its main determinants can therefore suggest how to improve it, and how to model the development as a function of international trade. First, by way of literature review, I examine different methodologies of estimating potential trade of countries of Central and Eastern Europe. I present the results for Croatia, among other countries. This gives me a general insight where Croatian international trade might have been, had Croatia not been a socialist country. In the second part I develop an empirical model of trade flows between Croatia and its main trading partners, and use this to find out the key determinants of Croatian exports and imports. In this part I investigate Croatian international trade more closely, i.e. I analyse its actual trade. The results indicate that exports and imports are influenced by different factors. To be more precise, exports are path dependent, i.e. countries of ex-Yugoslavia still play a very important role as Croatian export market. Imports are significantly higher from the European Union countries and from transitional countries, than from other countries. This suggest that in order to improve the trade Croatia should favour integration, especially with the EU and CEFTA countries, and at the same time not ignore ex-Yugoslavian countries as an important export market. These factors have to be taken into account when determining trade policies. Another implication of my work in terms of empirical results is that panel data analysis and cross-sectional estimation give approximately the same results. Both methods were proven to give robust results even for short time periods.

International trade; Gravity model; Croatia

nije evidentirano