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The Definitions of the Variables and the Data Sources
Our dependent variables used in the estimating equation (1) are bilateral exports and imports
of ten CEE countries that joined the EU in the two subsequent waves of enlargement to the
East in 2004 and 2007. These include five Central European countries: the Czech Republic,
Slovakia, Hungary, Poland and Slovenia, three North-Eastern European states: Estonia, Latvia
and Lithuania, and two South-Eastern European countries: Bulgaria and Romania. The trade
flows data comes from the single source UN COMTRADE database and is expressed in the
constant US dollars in 2000 prices. The sample choice was determined by data availability.
The sample covers 195 trading partners of the CEE countries in the period of 1993-2004. 15
This yields a total of approximately 16 thousand observations.
Our main explanatory variables include dummy variables indicating the EU Association
Agreements as well as dummy variables indicating various intra-CEE bilateral trade and subregional
trade agreements discussed in detail in Section 2 that were in force for the time span
covered by our sample. In addition to this in our study we control also for potential effects of
other preferential trading agreements concluded by the CEE countries. These include bilateral
agreements concluded with the EFTA member states, the Mediterranean countries as well as
the South Eastern European countries. Moreover, we also control for the potential effects of
the EU enlargement in 2004 by including a special dummy variable for the EU-25.
Our main control variables derived from the trade theory include two types of variables. The
first refers to economic country size measures while the second to the measures of factor
proportions. The country size is measured using the data on trading partners’ GDPs expressed
in constant 2000 US dollars and evaluated in the PPP terms to assure their cross country
comparability. The GDP data comes from the World Development Indicators 2006 (WDI)
database compiled and published on a CD-ROM by the World Bank in Washington.
15
The sample choice was determined by data availability. The sample is limited downwards because of the
political changes in Central and Eastern Europe related to the collapse of the Soviet Union and the break-up of
Yugoslavia in 1992 and the ‘velvet’ divorce between the Czech and Slovak Republics that earlier constituted the
Czech and Slovak Federal Republic.
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