An agreement originally signed by the countries of the Visegrad group (the Czech Republic, Hungary, Poland, and the Slovak Republic) on 21 December 1992 and effective since July 1994. Later on, Slovenia (1996) AU20: The in-text citation "Slovenia (1996)" is not in the reference list. Please correct the citation, add the reference to the list, or delete the citation. , Romania (1997) AU21: The in-text citation "Romania (1997)" is not in the reference list. Please correct the citation, add the reference to the list, or delete the citation. , Bulgaria (1999) AU22: The in-text citation "Bulgaria (1999)" is not in the reference list. Please correct the citation, add the reference to the list, or delete the citation. , and Croatia (2003) AU23: The in-text citation "Croatia (2003)" is not in the reference list. Please correct the citation, add the reference to the list, or delete the citation. joined CEFTA. When those countries became members of the EU they subsequently left the CEFTA.
Published in Chapter:
Free Trade and Gravity Model: Albania as Part of Central European Free Trade Agreement (CEFTA)
Nerajda Feruni (Epoka University, Albania) and
Eglantina Hysa (Epoka University, Albania)
Copyright: © 2020
|Pages: 31
DOI: 10.4018/978-1-5225-8458-2.ch004
Abstract
The purpose of this chapter is to build and explain the Gravity Model for the trade flows of Albania and 15 of its trade partners for the period of 2001-2016, both theoretically and empirically. The theoretical development of the subject gives an overview of the economic thought over the years regarding the concept of free trade, its benefits and threats, the Central European Free Trade Agreement (CEFTA), and the Gravity Model in order to be able to explain and interpret the patterns of trade between countries. The econometrical analysis illustrates the impact of gross domestic product (GDP) of partner countries, the distance between them, and CEFTA has on the trade flows of Albania. The Gravity Model built in this study supports the theoretical approach and it shows how GDP has positively affected trade flows, while distance has negatively affected trade flows. The impact of CEFTA is insignificant.