Gravity model analysis of globalization process in transition economies

Анотація

The globalization process develops itself differently for each transition country. Likewise, implementation of reforms and their impacts on trade relations show variety among countries. The article focuses on five countries (Finland, Estonia, Latvia, Lithuania, and Ukraine). It considers how the factors (the size of the economy, the ratio of the price index of the countries, common borders on the sea or on land, distance between the states and the existence of common currency) have affected the export trade volume with trading partners during 1996-2017. The main methodology of the article is formed around the gravity model, which suggests that trade relations between countries can be explained by their economic size and the distance between states' financial centres. The findings show that such factors still play a significant role, but logistic problems became much weaker during the last years. It is necessary to note the influence of the Industry 4.0, which intensifies the service of the economy and introduces new adjustments to the allegedly established

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