Efficiency of the intra-EU trade in goods and services: Geographical and product structure analysis

Abstract

Economic integration facilitated international trade within the EU with overall benefits for its economy. However, the importance of intra-EU trade varies by country and industry. This paper aims to estimate the efficiency of the intra-EU trade for particular Member States and economic sectors. The trade efficiency of the Member States is measured with the net export index and the difference in export and import growth. Correlation and regression analysis is used to assess sector-specific effects. The results show that South European Member States perform better in the efficiency of intra-EU services trade and worse in merchandise trade, but the difference is decreasing. Western European countries tend to have medium efficiency of services trade and stability in the efficiency of merchandise trade. North European countries are likely to have less than average trade efficiency and no major changes in it. Central European countries perform better than average and have an upward trend in merchandise trade efficiency. Ireland, Poland, Czechia, Slovenia, and Bulgaria have the best performance in the total intra-EU trade. The EU has a well-diversified intra-bloc trade with the domination of manufactured goods. The elasticity of value added to exports is the highest for apparel, automotive industries, agriculture, and travel services (0.8-1.2). Other sectors have lower elasticities: 0.3-0.7 (goods) or 0.4-0.6 (services). Export demand has little effect on the food industry, fuel industry, construction, and insurance sectors. The negative correlation in financial services was a prominent exception among industries.