The Similarity of the Demand Structure as a Determinant of the Commodity Structure of Bilateral Trade in the European Union Countries

Abstract

Objective: The aim of the article is to determine the influence of the process of convergence of the demand structure in the European Union countries on the share in the export structure of groups of products distinguished due to the share of the technological factor.

Research Design & Methods: A dynamic analysis of the similarity of the demand structure of the EU countries was made in the article. The interdependence between the convergence of the demand structure and the reduction of distance in the economic development level was presented. An analysis of the commodity structure of bilateral trade of the EU countries was conducted and the gravity model of foreign trade was used.

Findings: Similarity in the demand structure of trade partners influences the commodity structure of trade between them. The effects of this influence are different for trade relations of countries which are on a different level of economic development.

Implications & Recommendations: Conclusions drawn from the article are useful for the economic policy and support for exports. The research is worth continuing and completing with methods enabling the reference to more complex dependencies influencing the process of the demand structure convergence.

Contribution & Value Added: The article fills the research gap with regard to determining the influence of the alignment of the level of economic development on the convergence of the demand structure and referring this process to changes in the commodity structure of exports.