engleski

Regional Trade Agreement in Southeast Europe: A Force for Convergence?

The paper focuses on expected trade effects of the Free Trade Zone in Southeast Europe and their impact on economic growth. We assume that trade creation effect could be positive and it is realistic to expect a modest increase in intra-regional trade, especially within the group of ex Yugoslav republics that had already formed common market, although most benefits could go to Croatia as the most advanced country in the region. The reduction of trade barriers would reduce trade costs and benefit trade within the region and therefore could have a positive impact on economic growth only if the integration process within the region is parallely pursued with the EU-driven Stabilization and Association proces and MFN-based multilateral liberalization. In this case the RTA in the Southeast Europe could maximize the gains of trade integration in the region, which could result in higher growth rates of the SEE economies. At the same time, Free Trade Zone in the region would reduce uncertainties and risks and therefore improve credibility of the region as a whole, which could indirectly affect growth in a long run.

Southeast Europe; integration effects; intra-regional trade; convergence

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