The Impact Of The EU Membership On Bilateral Trade. Evidence From The European Union And Spain

Today,the world is highly globalized,therefore economies,cultures,policies and markets are interconnected,as they have never been before.One great example of globalization is the European Union.The European Union(EU)constitutes a unified trade and monetary body of 28 member countries and it is now one of the top traders in the world.Over the past few years,the positive impact of the EU membership for the EU member states has been questioned.Thus,this paper provides an assessment of the impact of the EU membership on bilateral trade flows within the EU as well as between EU member states and other countries.This empirical research also takes Spain as an example to see how the EU membership and other factors affect trade between Spain and other countries.In this study,the Gravity model is applied with a large panel data set of 45 countries between 1958 and 2006.The empirical results are consistent with the hypotheses made that the EU membership has a positive and significant impact on trade.Findings also show that the impact of the EU membership varies across decades.For Spain,the EU membership increased trade by 31%.Moreover,factors like belonging to the same regional trade agreement or sharing the same currency also have a positive and significant impact on trade.