The Drivers and Barriers of Trade and Integration in Europe & Central Asia

English

Abstract

This article examines the trade and integration patterns of the Europe & Central Asia region,
which has a high level of trade and integration, both within the region and with the rest of
the world. The article identifies and analyzes the endogenous and exogenous drivers of trade
and integration, such as trade liberalization, regional integration, domestic reforms, global
trends, technological changes, external shocks, and international agreements. The article also
uses a vector autoregression (VAR) model to estimate the impact of trade and integration on
four economic indicators: trade openness (Tr), foreign direct investment (FDI), income
growth rate (IGS), and environmental growth rate (EGS). The article finds that there is a
positive and significant impact of trade openness on itself, but no significant impact of trade
openness on the other three indicators. The article concludes that trade and integration have
complex and heterogeneous effects on the region’s economic performance and development.
The article suggests that policy makers should adopt a comprehensive and context-specific
approach to enhance the benefits and mitigate the challenges of trade and integration.