Recent Trends in European Trade

This article investigates whether European integration has led to increased trade and specialization among the member countries of the European Union. We find an increasing trend in the internal trade among the EU15 countries and that trade with new member countries is also increasing. The export of most EU15 countries is nearly evenly distributed on goods. Furthermore, we characterise European trade to see the driving factors behind this trade. Foreign trade in varieties of different quality dominates the trade between European countries as a consequence of the rising standards of living generated by the European integration. This trade is relatively high among large economies and economies in close proximity to each other. Finally, we see that the increase in trade in varieties of different quality is relatively larger among poor countries than among rich countries.