Processed Food Trade of Greece with EU and Non-EU Countries

Abstract

This paper examines the implications of the European Union (EU) regional trade preferences for processed food trade between Greece and its EU partners, and between Greece and non-EU countries. The empirical analysis relies on the gravity model, and uses different estimation techniques. The results show that the EU regional trade preferences led to substantial increases in processed food trade between Greece and its EU partners, emphasizing trade creation effects. The magnitudes of these increases are higher than the intra-EU average, and are more pronounced for Greece's imports than for Greece's exports. The results also indicate that the EU regional trade preferences brought about decreases in processed food trade between Greece and non-EU countries, implying trade diversion effects. The Greek food processing industry could benefit from competitiveness-promoting strategies (e.g., upgrading innovation activities, marketing and distribution channels, and production efficiency) to expand exports to the EU market and to counter import competition in the domestic market. JEL Classification: F13, F14, F15.