Econometric Analysis of Foreign Trade Efficiency of E.U. Members Using Gravity Equations

Abstract

Abstract This paper aims to analyse the foreign trade efficiency for Romania and compare it with the other E.U. member states. We use stochastic frontier analysis to estimate the efficiency component of foreign trade of Romania and EU countries. We built 27 econometric models, one for each country, considering EU members trade partners units plus eight extra-EU partners. We estimated the 27 member countries’ efficiency coefficients associated with each partnership. These coefficients were used to estimate the average efficiency scores for each of the 27 countries. The analysis results have shown that the economic crisis has not significantly changed trade patterns and hierarchies between EU countries, only lowered trade performances.