Market integration of agricultural structures in developing countries like Albania in the OECD

M.Sc. Erdit Nesturi, Dr. Edmond Kadiu, Prof. Dr. Stilian Apostoli

Abstract

The process of trade liberalization implied by WTO negotiations has increased the demand for studies aimed at a better understanding of market access issues on different developing countries. In this abstract we aim to get a closer look to integration of agricultural markets in developing countries like Albania and to produce a unique way of understanding the methods and the different views of several issues. We start from recent literature and we seek for an indirect estimation approach. Given these the literature now enables us to the possibility of using a complementary and indirect measure based on recent comprehensions. In fact this methodology has recently been renewed in two important and related aspects: the border effect approach and a more careful theoretical foundation.

We aim to estimate the bilateral trade model with a gravity specification close to theory. Our derivation of the gravity equation summarizes everything we believe for this method. We outline only the key features of the model in this abstract. A gravity-like equation can be derived from multiple trade models in which we include identical constant-elasticity-of-substitution (CES) regional preferences over goods differentiated by country of origin, and ‘iceberg’ trade costs.

Gravity can only measure trade barriers. In our framework we compare trade barriers between countries and certainly for undeveloped countries like Albania. This can be problematic since different countries could have different barriers for internal trade. We can view sensitive results to the measurement of distance among and within countries as viewed. However, none of these issues affect the time variation in border effect.

We share the idea that crossing a national border into the OECD induces a trade-reduction effect. This average border effect has differences across developed and non developed countries. A deeper explanation of such costs could be an important topic the full research.

In the given period the level of integration showed a meaningful tendency to a thick raise. Surprisingly, the intra-CEEC integration process in agriculture was stronger that in the EU-CEEC trade. Thus, the period of trade liberalization between EU and CEEC did not produce the expected results at all levels.

Keywords: Agricultural, Markets, Model, Tariffs, Integration, Developing, Countries

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