Social Development and International Trade in Central Europe
Keywords:social development indices, bilateral trade flows
In this paper we study the impact of social development on international trade in Central and Eastern Europe using the generalized gravity model. Many previous empirical studies which explored the determinants of trade flows, concentrated only on traditional gravity variables, such as the size of trading partners, factor abundance, technology differences or distance. In our study, in addition to the standard set of gravity variables, we examine the role of aggregate social development indicators such as Human Development Index and its components. Our results show that both aggregate and disaggregate measures of social development affect the volume of international trade flows. In particular, the education indexes seem to be positively related to bilateral trade flows.
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