Trade expansion is an important component of growth. EU countries have
benefited from advantages of a monetary union and liberalization of trade,
however there is room for further expansion fo trade. This thesis employs an
augmented gravity model equation to analyze EU trade
ows for important
commodities 84-89. The coefficients obtained are used to predict trade po-
tential for the 28 exporting European countries. Fixed effects with panel data
for the years 2005-16 have been used for estimation. The results show that
all of the effects that are traditionally observed in the "gravity" approach are
reasonable and statistically significant. In addition, cultural similarities such
as language, ethnicity or colonialism do not show a significant effect upon
bilateral trade for the commodities considered in this analysis. The EU coun-
tries' trade potential results, which are illustrated through the use of maps,
indicate that there is great potential with countries of the North America
and the Asia-Pacific region, such as USA, China, Russia and Australia.
(EN)
University of Ioannina
