1.Karadeniz ve Balkan Ekonomik ve Politik Araştırmalar Sempozyumu

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Feride DOĞANER GÖNEL, Kasım EREN, Aslı ÖZGÜR AKTAY
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1. Introduction
World trade remains an important engine despite the inevitable effects of global crisis. According toWTO reports,
the value of world merchandise exports increased from US$ 3.6 trillion in 1993 to US$ 17.9 trillion in 2012 which
it means five-fold increase for twenty years. Similarly the value of world merchandise imports increased from US$
3.8 trillion in 1993 to US$ 18.1 trillion in 2012 which has a same five-fold increase. When we look at the play-
ers in world trade, the most important fact was the increased share of developing countries; according to 2013
Human Development Report their share of developing countries in global trade rose from 25% in 1980 to 47% in
2010. Again another UN report emphasized that the growth of South-South trade has continued to account for
a majority of the growth of world trade (UNDP and Analysis Division, 2014:1). When we look at the figures, it is
easily seen that the growth rate of developed countries’ exports grew slowly than developing countries; in 2013 the
figures are 1.5 % and 3.3 % respectively. On the other hand similar trend is seen for imports: the figures are -0.2 %
and 4.4 % again respectively. In this picture the most remarkable increase in exports and imports belongs to Asian
and Middle Eastern countries ). In this framework,
the whole region of Balkans and Black Sea Countries (BBSCs) has become an important region for the global
economy and trade. The region’s several countries such as Russia, Turkey, Azerbaijan, Ukraine, have a serious
impact on economic policy of the world and also European Union. The EU-15 countries’ close trade relationship
has been reported not only with the other members of EU, but also with Turkey and Russia; in 2013 the share
of these two countries’ in EU’s imports and exports are 12.3 % 6.9 % for Russia and 3.0 % and 4.5 % for Turkey.
However, major emphasis in this atmosphere is placed on the role of the region as an “energy corridor” between
the Caspian Sea and the Western world. But the region’s role goes beyond this corridor, because this huge market
includes a population of 346 million people and the region’s economies are connected through other aspects of
economic relationships such as financial transactions, contracting services, labor mobility and tourism. Despite
these common points the region has quite serious political problems; the ‘issue’ of genocide disrupt the trade
between Turkey and Armenia, there is also another conflict between Armenia and Azerbaijan on Nagorno Karab-
kh, the trade relationship between Georgia and Russia are hampered by another ‘issue’ of separatists in Abkhazia
and South Ossetia. Finally the political and military tensions between Ukraine and Russia seem to be endless.
The motivation for this study is to use a gravity model to annual bilateral trade between BBSCs and the EU-15 for
studying the determinants of this relationship After the transition several studies have analyzed western Balkans
and/or Southeast European Countries. Some of these studies found that there is a rapid convergence towards the
high level trade relationship with EU (Hvrylysyn and Al-Atrash, 1998:15-16; Kaminski et al. 1996, Jakab et al,
2001, Fidrmuc and Fidrmuc, 2003). Most of these studies the application of gravity model is used as a useful tool
In our gravity model bilateral trade volume of selected BBSCs increases with the economic sizes of these countries
and it decreases with the geographical distance between them. In other words, it is argued that the larger the econ-
omies of the relevant sides, the larger the trade between them. Similarly the shortest distance between countries
leads the highest volume of trade. It is also worth to ask whether the border countries have strong trade relations
or not. Another question we ask is whether the regional trade agreements (RTAs) are effective or not.
Due to the lack of regular data for some countries such as, Moldova, Montenegro, Bosnia & Herzegovina, Kosovo,
Macedonia and Serbia the model has been analysed for only 9 countries. As for European Union, data have been
analysed for the EU-15 (Belgium, Luxembourg, France, Germany, Italy, UK, the Netherlands, Denmark, Austria,
Finland, Greece, Ireland, Portugal, Spain and Sweden).
2. General Overview of Bilateral Trade Between EU-10 and BBSCs
EU is the largest trading partner of the most of the BBSCs. Over the last 10 year the region has strong foreign
trade relations with some of the Union’s countries such as Germany and Italy; in 2012 the shares of EU-15 in 9
BBSCs total exports are between 10 % and 72 % and the shares of EU-15 in their imports are between 20 % and
55 %. That means BBSCs are more important to the EU-15 countries as an importer than as an exporter of com-
modities, since BBSCs accounted for nearly 2 % of the value of the total EU-15 commodity exports and imports.
Only four countries of EU-15 (Greece, Germany, Austria and Italy) have relatively higher share in the EU-15’s