Measuring the effects of customs and administrative procedures on trade: Gravity model for south-eastern Europe

Abstract

This paper measures the effects of certain customs and administrative procedures on trade between the countries of South-Eastern Europe in the period 2008- 2012. Following OECD methodology, we employ the augmented gravity model. The empirical results suggest that the number of days spent at the border and costs paid in both importer and exporter countries had significant negative influence on the volume of trade in the period 2008-2012. In addition, the model underlines that sharing the same border and being part of the former Yugoslav market are important determinants of trade in the region.