Saturday, 27 March 2010: 15:10
Objectives and project description:
The deepening and fostering of the economic integration process in the European Union has raised interest in the study of the growth driven forces and achievement of real convergence. In the theoretical and empirical literature there is a large consensus that the trade openness is one of the most important determinants of growth, carrying a positive impact on real convergence. But the quantification of the relationship between the domestic economic growth and the economic conditions of the major trading partner has not been extensively approached in literature.
The paper looks at the economic growth and relative income level of the EU’ major trading partners and examines whether they have any significant impact on economic growth in the EU.
Data and method:
The countries of the European Union and the European Union as a whole are analyzed together in our empirical part. This approach allows checking the validity of our research question applied on the extensive case of EU. Their major trading partners are taken from the global economy, being not restricted only to Europe. The analysis uses panel data for the period 2000-2008. The macroeconomic indicators considered in our analysis are the economic growth rate, per capita GDP, total productivity factor, foreign direct investments and other determinants of economic growth. As methodological tools we use the GMM system and the classical approach (instrumental variables in regression models).
Expected conclusions:
We expect to find that countries generally benefit from having richer and fast-growing trading partners. The effect of trading with developing and less developed countries cannot be predicted in advance, but could reveal interesting conclusions since the literature is not consistent at this point. Also, the results give insights to effects that the EU’s trading partners have on the conditional and absolute convergence within the European Union.
The deepening and fostering of the economic integration process in the European Union has raised interest in the study of the growth driven forces and achievement of real convergence. In the theoretical and empirical literature there is a large consensus that the trade openness is one of the most important determinants of growth, carrying a positive impact on real convergence. But the quantification of the relationship between the domestic economic growth and the economic conditions of the major trading partner has not been extensively approached in literature.
The paper looks at the economic growth and relative income level of the EU’ major trading partners and examines whether they have any significant impact on economic growth in the EU.
Data and method:
The countries of the European Union and the European Union as a whole are analyzed together in our empirical part. This approach allows checking the validity of our research question applied on the extensive case of EU. Their major trading partners are taken from the global economy, being not restricted only to Europe. The analysis uses panel data for the period 2000-2008. The macroeconomic indicators considered in our analysis are the economic growth rate, per capita GDP, total productivity factor, foreign direct investments and other determinants of economic growth. As methodological tools we use the GMM system and the classical approach (instrumental variables in regression models).
Expected conclusions:
We expect to find that countries generally benefit from having richer and fast-growing trading partners. The effect of trading with developing and less developed countries cannot be predicted in advance, but could reveal interesting conclusions since the literature is not consistent at this point. Also, the results give insights to effects that the EU’s trading partners have on the conditional and absolute convergence within the European Union.