Page 26 - Azerbaijan State University of Economics

Evangelos Siskos, Konstantia Darvidou: Trade of the EU with Eastern European countries
(case of Ukraine and Turkey)

exports to Western Europe had some seasonality, while import form the EU was
more stable across a year.
But there is a lack of comparative studies for bilateral trade with several
countries, including comparing Turkey and Ukraine as trade partners of the EU.
2. Methodology. We analyze structure and trends of exports of the EU-28
Member States, Ukraine and Turkey as well as their bilateral trade. We use mostly
the UNCTAD (2016) data. Eurostat (2016) data is used to analyze bilateral trade in
services.
First, we analyze the product structures of goods export of the EU, Ukraine
and Turkey in order to find out, whether they are competitors to the existing
Members States. We use the Pearson correlation formula:

In our case x i is the share of good i in the total exports of country X and y i is
the share of good i in the total exports of country Y. Correlation close to 1 mean that
two countries are close competitors. Correlation close to 0 means that competition
between countries is likely to be somewhat lower. And in most cases correlation
close to -1 would mean low competition between countries. A similar approach is
used to analyze similarity of structure of services exports. But we should note that
correlations for structure of exports of goods and services are not comparable,
considering different number of types of goods (255) and services (12).
The next step is to find out for what products Turkey or Ukraine are more
important markets and suppliers and which of the EU Member States depend more
on exports to Ukraine and Turkey and import from them. We also consider export
and import growth trends and bilateral trade balances for specific Member States.
Trade in goods and trade in services are analyzed separately for two reasons. In most
cases the data for 2015 is available, except for bilateral trade in services (data for
2014 is used in this case). Also there is some missing data for structure of services
exports (Finland) and bilateral trade in services (Germany, Spain and Finland).
3. Results.
3.1. Structural similarity of exports.
The correlation between the structure of goods exports of Turkey and the EU
is high enough (0.51), while the correlation between the structure of exports of
Ukraine and the EU is low (0.0) – see figure 1. Therefore Ukrainian exports compete
much less with the EU‘s exports than the exports of Turkey. There is also low
correlation between export structures of Ukraine and Turkey (0.05).

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