Free Trade Agreements and Trade Integration Among South Eastern European Countries: Gravity Model Estimations

This paper evaluates trade flows among SEE-9 countries by including dynamics into a panel data gravity model. The GMM approach seems to be the right econometrical model in allowing dynamics into the gravity models for trade. The model produced robust outcomes (in terms of statistical diagnostics) underlying that actual trade is affected by previous (lagged) trade flows. In accordance with the literature on gravity models for trade, the paper finds out that trade is positively influenced by GDP, FTAs, Colonial links and Contiguity.