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GTAP Resource #4764

"The EU-Ukraine Deep and Comprehensive Free Trade Agreement and the Importance of FDI"
by Olekseyuk, Zoryana


Abstract
To analyze Ukraine’s deep and comprehensive integration with the EU we develop a multi-regional general-equilibrium simulation model incorporating heterogeneous firms and FDI in business services. This allows for consideration of a.) trade growth in new varieties; b.) aggregate productivity changes attributed to reallocation of resources across and within an industry; c.) productivity growth in manufacturing due to increased access to business services. The results indicate relatively small gains for the EU, whereas Ukraine benefits with a welfare increase over 8%. The deindustrialization impact, previously found by Balistreri & Olekseyuk [2014], is supported by our findings. Ukraine’s welfare gains are higher under Armington structure compared to monopolistic competition due to a movement of resources into Ukraine’s traditional export sectors producing under constant returns. Implementation of the FDI modeling approach and liberalization of the barriers to FDI, however, mitigate the deindustrialization impact as multinational firms enter Ukrainian market, which increases the number of available varieties and, consequently, induces productivity growth of manufacturing sectors due to a better access to business services.


Resource Details (Export Citation) GTAP Keywords
Category: 2015 Conference Paper
Status: Published
By/In: Presented at the 18th Annual Conference on Global Economic Analysis, Melbourne, Australia
Date: 2015
Version: 1
Created: Olekseyuk, Z. (4/15/2015)
Updated: Olekseyuk, Z. (6/11/2015)
Visits: 980
- Model validation and sensitivity analysis
- Foreign direct investment
- Preferential trading arrangements
- Trade in services
- The GTAP Data Base and extensions
- Commonwealth of Independent States
- Europe (Eastern)
- European Union


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