The effects of EU preferential treatment

Seminar paper from the year 2011 in the subject Business economics - Economic Policy, grade: 16,00/20,00, Solvay Brussels School of Economics and Management, course: Topics in Economic Integration, language: English, abstract: The paper discusses the evolution and current state of the effects on trade flows of EU preferential treatment, of which the widest setting has been the Generalised System of Preferences. The main concern of our study has been to do research on the topic, before deepening our curiosity on two core articles of the literature. By comparing Persson and Wilhelmsson analysis with Aiello and Demaria's, and examining them in contrast with other writings, we could determine the primary interests we need to take into account in order to assess, as accurately as possible, the impact of these trade agreements. In this manner, we explained why we retained the gravity model as the most reliable statistical model in our efforts of settling the most precise method of measurement, which has been besides a very commonly used one in the literature. We also considered taking into consideration the key difficult points encountered when trying to reach our objectives, such as, on the one hand, avoiding omitting major factors of trade enhancement (i.e. distance or language) or on the other hand, excluding countries that would distort our conclusions due to their own composition (i.e. former USSR satellites). Our paper is innovative insofar as it offers a thorough investigation of the written work on the subject, which, by comparing models, contrasting figures and confronting viewpoints, brings us closer to the truth.