Impact of regulatory trade barriers and controls of the movement of capital and people on international trade of selected Central, Eastern and Southeastern European economies

Abstract

Free movement of people, goods, services and capital is one of the cornerstones of the European Union (EU). Although various obstacles to free movement still exist, all EU members are dedicated to reducing barriers. While the role of tariffs is gradually declining, other barriers to free movement are becoming increasingly important in recent years. Therefore, this paper focuses on the impact of regulatory trade barriers and controls of the movement of capital and people on international trade of selected Central, Eastern and Southeastern European economies (CESEE), i.e. post-communist economies that eventually became EU members. CESEE economies stem from a centrally-planned economy environment which is why it is particularly interesting to analyse how these countries managed to establish free movement and reduce trade barriers. Employing panel data methodology, the findings of the paper suggest that reducing regulatory trade barriers and controls of the movement of capital and people leads to an increase in international trade. Moreover, accompanying the results of the empirical analysis with the indicators of corruption and ease of doing business highlights the necessity of implementing various structural policies and tackling corruption as a prerequisite of fostering the free movement of people, goods, services and capital.