EuroEconomica, Vol 36, No 1 (2017)

Abstract

The objective of this paper is to evaluate the effects of bilateral trade between Serbia and EUcountries in the period 2001-2015 on the basis of a gravity model. So far in research papers the gravity modelhas been used for the evaluation of effects of trade among different countries. The gravity model, whichcombines the cross-section data and the time-series data, has been estimated to the panel data. Estimatedresults based on a sample of 28 countries reveal that the economic size of foreign countries, the market size oftrading partners (the number of inhabitants), and the geographical distance produce altogether huge effects onSerbia’s total trade and exports. Border and language factors have also been taken into account. The researchleaves room for further scientific analyses and provides guidance for trade policy creators in analyses fordirections of the Serbian trade. This research is based on complex econometric analyses and a recognisedmodel, and shows that there is considerable room for the growth of bilateral trade between Serbia and EU.