DIMENSIONS AND PATTERNS OF NAFTA EUROPEAN UNION TRADE

MY ARTICLE

DIMENSIONS AND PATTERNS OF NAFTA-EUROPEAN UNION TRADE

THEME-II

DIMENSIONS AND PATTERNS OF NAFTA-EUROPEAN UNION TRADE

Dr.Debesh Bhowmik

Abstract

In this paper,author studied the trends, prospects and determinants of EU-NAFTA  trade during 1990-2016 showing cointegration and vector error corrections of world export share and import shares of EU and NAFTA with their determinants like export and import concentration index,export and import diversification index and trade balance indicator. Moreover, Euro Area’s trade with NAFTA from 1995-2016 was also explained by export and import concentration index and trade correlation indices. The paper concludes that world export share and import shares of both EU and NAFTA during 1990-2016 have been declining significantly with stationary process in which all of them have significant structural breaks downward. World export and import shares of EU from 1990-2016 are significantly negatively related with export and import diversification index but not significantly related with concentration and trade balance index. They are cointegrated with one cointegrating equation each having stable VECM and one significant error correction.World export and import shares of NAFTA are negatively related with concentration index, diversification index and trade balance index and found positive relation among trade balance index and import share of NAFTA. Both the export and import of EA to NAFTA during 1990-2014 have been significantly declining at the rates of 4.25% and 4.0% per year respectively.Euro Area’s export share is negatively related with export concentration index of EA to NAFTA and they are cointegrated with significant error correction process in stable and nonstationary VECM. Similarly,Euro Area’s import share is negatively related with import concentration index of EA to NAFTA with significant cointegration and error correction process in  stable and nonstationary VECM . Lastly , trade correlation index of EA-NAFTA trade in 2012 in comparison to 2005 suggests that EA-NAFTA trade has been improved or better off. 

JEL codes—C32,F02,F14,F15

Key words – Trade co-operation,EU-NAFTA trade agreement,EU-NAFTA trade,EU-NAFTA trade indicators

The paper concludes that world export share and import shares of both EU and NAFTA during 1990-2016 have been declining significantly in which all of them have significant structural breaks downward. World export and import shares of EU from 1990-2016 are significantly negatively related with export and import diversification index but not significantly related with concentration and trade balance index. They are cointegrated with one cointegrating equation each having stable VECM and one significant error correction.World export and import shares of NAFTA are negatively related with concentration index, diversification index and trade balance index and found positive relation among trade balance index and import share of NAFTA. Both the export and import of EA to NAFTA during 1990-2014 have been significantly declining at the rates of 4.25% and 4.0% per year respectively.Euro Area’s export share is negatively related with export concentration index of EA to NAFTA and they are cointegrated with significant error correction process in stable and nonstationary VECM. Similarly,Euro Area’s import share is negatively related with import concentration index of EA to NAFTA with significant cointegration and error correction process in  stable and nonstationary VECM. Lastly , trade correlation index of EA-NAFTA trade in 2012 in comparison to 2005 suggests that EA-NAFTA trade has been improved or better off.