SIZE OF ECONOMY EFFECTS FOR INTERNATIONAL TRADE IN THE EU

Abstract

The difference in export strategies of small and large economies is based on different sensitivity of various industries to the economies of scale effect. The paper aims at analyzing the impact of economy size on the structure of merchandise exports of the EU member states and other advanced economies. Additionally the effects of income level and economic integration are estimated. Correlation, regression and cluster analysis were used as methods of research. Specialization in exports of most components of food industry and agriculture is widespread among small and less developed economies outside the EU. Exports of fuels and energy are also more typical to small and less integrated economies. Textile and apparel industry is relatively more important for economies with cheaper labor. Exports of ores and metals and creative products do not depend on home market and income level effects. Competitive advantages in most of these industries determine the export structure of Ukraine as a middle income medium-size economy. Most advanced economies obviously dominate in exports of chemical and high technology industries. Engineering is a very diverse industry. Its components either do not depend on home market effect (production of most types of vehicles, instruments and apparatus) or depend on existence of large domestic market and / or membership in the economic union (electric and electronic devices, automobiles, industrial equipment). It is also important to have access to large market of economic union for production of furniture, toys and games. The latter two industries as well as medium technology engineering may receive additional impetus for development under scenario of accession of Ukraine to the EU.