Implications of the European Integration: Revisiting The Hypothesis of Hub-and-Spokes Model

Tinatin Akhvledian
Bartosz Witkowski


Alre­ady in 1994, Bal­dwin pre­dic­ted the for­ma­tion of the hub-and-spo­kes model to descri­be the out­co­mes of eco­no­mic inte­gra­tion across the­Eu­ro­pe­an Union (EU)implying mar­gi­na­li­za­tion of the new EU mem­ber sta­tes (NMS). We exa­mi­ne the vali­di­ty of this hypo­the­sis by put­ting an empha­sis on Vise­grad gro­up of coun­tries (The Vise­grad four, V‑4: Poland, the Czech Repu­blic, Slo­va­kia, Hun­ga­ry) and inve­sti­ga­te the impact of the Euro­pe­an inte­gra­tion sche­me on the­ir export per­for­man­ces. To con­duct the ana­ly­sis, we esti­ma­te the augmen­ted gra­vi­ty model for the panel data of the exports of the EU mem­bers with the rest of the world con­si­sting of 234 coun­tries. We set the struc­tu­ral bre­ak in 2004 and employ pseu­do Pois­son maxi­mum like­li­ho­od (PPML) esti­ma­tor­for panel data. Fur­ther­mo­re, we pro­vi­de robust­ness checks with the use of PPML for the pooled sam­ple. Esti­ma­tion results do not favor the cre­ation of the hub-and-spo­kes model, but rather demon­stra­te that inte­gra­tion within the EU was quite bene­fi­cial for V‑4 witho­ut giving the ori­gin neither to the­ir peri­phe­ri­sa­tion nor to the loss of mar­kets of the natu­ral tra­de partners.

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