REGIONAL COOPERATION AND ECONOMIC INTEGRATION

Goran Buturac, Ph.D., Research Fellow,
The Institute of Economics,
Zagreb, Croatia
REGIONAL TRADE AGREEMENTS AND REGIONAL COOPERATION
COMPARISON OF TRADE PATTERNS OF SELECTED SOUTH-
EASTERN EUROPEAN COUNTRIES
Abstract
This paper examines the trade patterns of selected south-eastern European countries. The
empirical research comprises the analyses of: dispersion and concentration, comparative
advantages, intra-industry trade, trade specialization, export competitiveness and export
similarities. The methodology of the paper is based on applying the following indicators of
international trade: TEI (Trade Entropy Index), RCA (Revealed Comparative Advantages),
Grubel-Loyd Index (GL), RUV (Relative Unit Value), Index of Export Competitiveness
and Index of Export Similarities (ES). The empirical results for the observed countries
reveal the conclusion about existing comparative advantages in raw materials and labor
intensive sectors (base metal, textiles, footwear, wood). Those products with a higher level
of comparative advantage do not have a higher ratio between the unit value of exports and
imports which points to unfavourable trade patterns. All the observed countries show the
most favorable position on the EU 25 markets in agricultural and textile sectors. Analyzed
countries do not have competitive export structures but complementary.
Key words: trade patterns, comparative advantages, trade specialization, export
competitiveness, south-eastern European countries
INTODUCTION
The purpose of this paper is to analyze changes in the trade patterns of selected southeastern
European countries, as well as to explain the noted similarities and differences
in the dynamics and direction of movements in comparative advantages and in trade
specialization. The analysis comprises the following countries: Bosnia and Herzegovina,
Croatia, Macedonia, Montenegro and Serbia. During the last 15 years of transition these
countries have witnessed an abundance of very interesting and significant economic
events. Croatia and Macedonia are candidate countries for joining the EU while Bosnia
and Herzegovina, Serbia and Montenegro are prospective candidate countries.
All these countries face the challenge of more active inclusion in the European
integration process, and one of the key factors in this path is the improvement in trade
patterns and export competitiveness. The changes of export structure towards higher
value added products are a precondition of growth in export competitiveness. The latest
trends on the international markets are characterized by a significant fall in demand and
a strengthening of competitive pressure. In this context the ability of the adjustment to
new market circumstances is especially important for the achievement of continual growth
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