Tradeflow Study - UNDP Black Sea Trade and Investment Promotion ...

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. II.1.3 Intra-industry trade between BSEC Member States Although trade flows are determined by differences in comparative advantages, a wide range of other factors also influence the success or failure of efforts to promote industrialization and growth. In the context of globalisation of supply chain management and assembly operations, there is a growing level of intra-industry trade (IIT), which plays an important positive role in the success of economic growth. Theory suggests that intra-industry exchange produces extra gains from international trade over and above those associated with comparative advantage because it allows a country to take advantage of larger markets through specialisation. The IIT index ranges between zero and one (or 0 percent and 100 percent), with larger values indicating a greater level of trade between firms in the same industry. Higher IIT ratios suggest that net gains from specialization in different products are being exploited and that the participating country is increasing its integration into the world economy. In the context of this study, this suggests that both intra-industry trade opportunities are high and that the export sector has become relatively sophisticated. The IIT index within the BSEC region is calculated as IIT 1 jk xijk mijk i xijk mijk i Where i, j and k indicate industry, home country and partner country, respectively. X ijk and M ijk represent exports and imports of industry i in country j to country k, respectively. Figure 3 displays the overall IIT index for each country with regards to the BSEC and the total trade within the region for each country. One can note that the highest levels of IIT are recorded for Romania and Bulgaria while the lowest levels relate to Albania, Armenia, Azerbaijan, Serbia and Montenegro, and Ukraine. Based on the results, it seems that Romania and Bulgaria have the highest integration in supply chains, and Greece, Russia and Turkey also displaying relatively high levels of intraindustry trade. It should be noted that the IIT can also be influenced by other factors such as the aggregation of statistics with the result that often distinct production processes are classified under the same chapter heading. For the purposes of this study, the two digit level was used. The detailed results of the IIT are given in Annex 1 in Table A6. 26/135
IIT (0%: Low; 100%: High) Figure 3. Intra-industry trade between BSEC member states in 2005 65% 55% Bulgaria Romania Scale relates to total trade Size: US$ 5 billion 45% Greece Turkey 35% Russia 25% Georgia Moldova 15% 5% Albania Armenia Azerbaijan Ukraine Serbia & Montenegro -5% Source: Calculations by author based on UNSD Comtrade Statistics, 2006 II.1.4 Intensity of trade between BSEC Member States The trade intensity index (TI) is used to determine whether the value of trade between two countries is greater or smaller than would be expected on the basis of their significance in world trade. It is defined as the share of one country’s exports going to a partner divided by the share of world exports going to the partner. Trade intensity in the BSEC region is calculated as: T ij x x ij wj j j x ij x wj Where x ij is the value of exports of BSEC (i) to BSEC (j); x wj is the value of world exports to BSEC (j); 27/135
Page 1: Black Sea Economic Cooperation: Stu
Page 4 and 5: . Table of Contents Abbreviations .
Page 6 and 7: . Table 15d. Greece’s Commitments
Page 8 and 9: . Abbreviations BSEC EBRD EU EUROST
Page 10 and 11: . econometric model, referred to as
Page 12 and 13: . In this regard, travel services h
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Page 16 and 17: Current account balance (% of GDP)
Page 18 and 19: % of GDP . The dynamism of the priv
Page 20 and 21: . I.2. Background to Trade and Inve
Page 22 and 23: . II. Trade Potential and Opportuni
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Page 26 and 27: Imports Perspective . There are cer
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Page 32 and 33: . Table 10 provides a summary of th
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Page 36 and 37: . Wood and wood products, in parti
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Page 42 and 43: . II.4. Services With the exception
Page 44 and 45: . Table 13. Performance of trade in
Page 46 and 47: . Table 14a. Indicative Service Exp
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Page 54 and 55: . Table 15b. Armenia’s Commitment
Page 56 and 57: . Table 15d. Greece’s Commitments
Page 58 and 59: . Table 15f. Turkey’s Commitments
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Page 62 and 63: . Table 16 Foreign direct investmen
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Page 66 and 67: . III.3. Sectoral opportunities BSE
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Page 70 and 71: . Table 23b. FDI in Bulgaria (2005)
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. of trade in services performance,
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. Egger, P. (2002), An Econometric
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. World Bank (2005), Trade, Transp
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. Annex 1. Trade Indicators 82/135
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. Table A2. Major Import Partners f
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. Table A4. Major Import by Product
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Albania Armenia Azerbaijan Bulgaria
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. HS Description ALB ARM AZE BGR GE
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. Table A7 Trade intensity in BSEC
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. HS Description ALB ARM AZE BGR GE
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. country I and country j’s capit
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. Annex 2.3. Results of Gravity Equ
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. Georgia Sector / Exports to ALB A
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. Russia Sector / Exports to ALB AR
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. Annex 2.4. Results of Trade Flow
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Annex 2.5. Results of Trade Flow An
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. Note: Excludes energy and tobacco
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