Determinants of Kosovo Trade: A Gravity Model Approach
Languages of publication
This study attempts to identify and quantify the factors affecting bilateral trade flows between Kosovo and its trading partner countries using a gravity model. The econometric model is estimated based on both economic and institutional aspects. The results show that family networking with Kosovo emigrants determines to a large extent both exports and imports, while corruption and informality in the partner country seem not to be issues with regard to Kosovo imports. This comes as a surprise given the initial assumption that Kosovo trades more with countries that have a high share of corruption because of informal networks between small and medium enterprises (SME) predominant in Kosovo. The regional CEFTA free trade agreement has a positive effect on both Kosovo imports and exports. Key words: international trade, gravity model, informality, Kosovo
- Acemoglu, D., Johnson, S. and Robinson, J.A. 2001. The colonial Origins of Comparative Development: An Emprical Investigation. American Economic Review 91:1369-1401.
- Anderson, J. 1979. A theoretical Foundation for the gravity Equation. The American Economic Review 69 (1): 106-116.
- Anderson, J. and Van Wincoop, E. 2003. Gravity with gravitas: A solution to the border puzzle. American Economic Review 93(1): 170-192.[Crossref]
- Bergstrand, J. 1985. The Gravity Equation in International Trade: Some Microeconomic Foundations and Emipirical Evidence. The Review of Economics and Statistics 67:474-81.
- CBK. 2008. Annual Report. Central Bank of the Republic of Kosovo. Prishtine.
- Deardorff, A. 1998. Determinants of Bilateral Trade: Does Gravity Work In a Neoclassical World? In: Frankel, J.A. (ed.) The Regionalization of the World Economy, NBER, Cambridge, MA.
- De Benedictis, L., De Santis, R. and Vicarelli, C. 2005. Hub-and-Spoke or Else? Free Trade Agreements in the Enlarged European Union. European Journal of Comparative Economics 2 (2): 245-260.
- Depken, C.A. and Sonora, R.J. 2005. Asymmetric Effects of Economic Freedom on International Trade Flows. International Journal of Business and Economics 4(2): 141-155.
- Duc, C., Lavallee, E. and Siroen, J.-M. 2008. The Gravity of Institutions. Economie Internationale 113:95-113.
- Eaton, J. and Kortum, S. 1997. Technology and Bilateral Trade. NBER Working Paper No. 6253.
- Frankel, J. A. 1997. Regional Trading Blocs in the World Economic System. Institute for International Economics, Washington DC.
- Ghatak, S., Pop, S., Monica, I. and Daly, V. 2009. Trade and Migration Flows between Some CEE Countries and the UK. Journal of International Trade and Economic Development. 18 (1): 61-78.
- Helpman, E. and Krugman, P. 1985. Market Structure and Foreign Trade. MIT Press.
- Holzner, M. and Gligorov, V. 2004. Illegal trade In South East Europe. European Balkan Observer 2(3): 12-15.
- Karemera, D., Smith, I. W., Ojah, K., and Cole, A. J. 1999. A Gravity Model Analysis of the Benefits of Economic Integration in the Pacific Rim. Journal of Economic Integration. 14(3): 347-367.
- Linnemann, H. 1966. An Econometric Study of International Trade Flows. North-Holland, Amsterdam.
- Lucas, R. E. B. and Stark, O. 1985. Motivations to Remit: Evidence from Botswana. The Journal of Political Economy 93(5): 901-918.[Crossref]
- Malitz, J. 2008. Language and Foreign Trade. European Economic Review. 52(4): 667-699.[Crossref]
- MEF. 2007. SemiannualMacroeconomicBulletint. Ministry of Finance and Economy. Prishtine.
- MTI. 2007. Kosovo SME Observatory. Ministry of Trade and Industry. Prishtine.
- MTI. 2009. Trade Policy of Kosovo. Ministry of Trade and Industry. Prishtine.
- Musila, J.W. and Sigue, S.P. 2010. Corruption and International Trade: An Empirical Investigation of African Countries. World Economy 33(1):129-146.[WoS][Crossref]
- North, D. 1990. Institutions, Institutional Changes and Economic Development. Cambridge University Press: New York.
- Oguledo, V. I. and MacPhee, C. R. 1994. Gravity Models: A Reformulation and an Application to Discriminatory Trade Arrangements. Applied Economics 26(2): 107-120.[Crossref]
- Riinvest. 2003. Trade Policy and Export Promotion in Kosovo. Prishtine.
- Riinvest. 2007. Diaspora and Migration Policies in Kosovo. Prishtine. SOK. 2008. Statistics of External Trade. Statistical Office of Kosovo.
- Prishtine. Sonora, R.J. 2008. On the Impacts of Economic Freedom on International Trade Flows: Asymmetries and Freedom Components. EFZG Working Paper No.08-05.
- Summary, R.M. 1989. A Political-Economic Model of U.S. Bilateral Trade. The Review of Economics and Statistics 71(1): 179-182.[Crossref]
- Tinbergen, J. 1962. Shaping the World Economy: Suggestions for an International Economic Policy. The Twentieth Century Fund, New York.
- UNMIK. 1999. UNMIK Regulation 1999/3. UNMIK Press Release, Prishtine.
- UNMIK. 2006. UNMIK's Impact on the Kosovo Economy. Kosovo Economic Outlook, Prishtine.
- Vujcic, B. and Sosic, V. 2005. Trade integration and Croatian accession to the European Union. In: Katarina Ott (ed.). 2005. Croatian Accession to the European Union: Facing the Challenges of Negotiations. Books on Croatian accession to the European Union, Institute of Public Finance, Volume 3, Number 3, May.
Publication order reference