Trade policies and integration of the Western Balkans

Based on a newly constructed multi-country input-output table including all European countries, we estimate the economic effects of the EU accession countries entering the "Stabilisation and Association Agreement" (SAA) with the EU and the potential effects of joining the European Single Market applying a structural gravity framework. The results point towards strong positive effects on trade for the SAA countries, but only small effects for the EU Member States. Conducting a counterfactual analysis, the paper gives an indication of the magnitude of the positive impacts on GDP for these countries. In addition, a detailed industry breakdown of these effects is provided.