Measurement of Export Market Concentration for the Largest European Economic Integrations

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Abstract

Background: By joining different regional economic trade agreements, countries achieve preferential trade liberalisation. There are four main types of regional economic agreements in the world today: free trade area, customs union, common market, and economic and monetary union.

Objectives: The goal of this paper is the measurement of the export market concentration for the largest European regional economic integrations in the period between 1995 and 2016.

Methods/Approach: Various concentration measures have been used in the measurement of export market concentration, but the emphasis is placed on the standardized Herfindahl-Hirschman index as the basic measure of trade concentration.

Results: Results of the analysis have shown that the highest concentration level of trade with countries worldwide is among the European Free Trade Association (EFTA) countries, whereas the EU-15 countries seem to have the lowest concentration level. On the other side, the Central European Free Trade Agreement (CEFTA) countries have the highest concentration level of trade with countries from the same group, and again the EU-15 countries have the lowest concentration level, which indicates that the CEFTA countries implemented deeper integration processes related to mutual intra-regional trade.

Conclusions: Deep integration processes led to lower values of export market concentration indices for intra-regional trade among countries of the same regional economic integration in comparison to trading with countries worldwide.

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