The paper analyzes the increase in transition countries’ exports to their non-traditional trade partners. It uses four different measures of product differentiation to find out the extent that the increase in product variety explains this phenomenon. It is found that opening up to new trade...

Since McCallum’s (1995) finding of surprisingly high border effect on trade between US and Canada, there have been a number of studies on other parts of the world, and improvements made to the gravity model to accurately measure this effect. This paper suggests some other modifications to the...

The paper analyzes the factors behind the reorientation of transition countries’ exports to their non-traditional partners outside their former block. First, the amount of reorientation is calculated using a gravity model. Then, reasons for the cross-country differences in the rate of closing...

The increase in exports to market economies is a good sign, but it is not conclusive about the extent of restructuring of production technologies experienced in transition countries. This paper explores the source of the increase with an analysis of their exports’ quality, interprets the...

Trade liberalization increases competitive pressures on domestic firms, and thus creates incentives for reducing costs of production through technological progress. Through this channel, backward countries get a chance to narrow their technological gap with more advanced countries. In this...

This paper analyzes trends in different components of trade of transition countries. To explain the cross-country differences, the paper points out the important distinction between the determinants of inter-industry trade and intra-industry trade (IIT), and horizontal and vertical IIT. Using...

This paper modifies the two-industry, two-country Heckscher-Ohlin model with intermediate goods to decompose trade into its horizontal and vertical intra-industry, as well as inter-industry parts. Acknowledging that liberalization affects each type of trade differently, and that changes in each...

After a short background on recent developments in gravity modelling and liberalization agreements in Europe, this paper measures the trade creation and diversion effects of major European agreements based on the results of a correctly specified triple-indexed gravity model with bilateral fixed...