Trade Barrier Effect on European Union Member States Export Diversification From 1995 to 2022

Abstract

This paper explores the trade barriers' impact on export diversification at the country level in the European Union. Using a database with EU-27 countries over 28 years at the HS4 level of disaggregation (872 exported products), we investigate diversification choices under a protective trade environment. This paper finds the trade barriers, import concentration, inflows FDI stocks, and the European Union membership negatively correlated with export diversification. The enlargement of service and agriculture sectors diversifies a country’s exports. Additionally, this paper finds a nonlinear relationship between GDP per capita and export diversification in the EU, consistent with Imbs and Wacziarg (2003) and Cadot et al. (2011a).