Export of Travel Services in Western Balkans: A Gravity Model Approach

ABSTRACT

This paper investigates the importance of travel service exports in Western Balkans countries. It identifies the key drivers and barriers in exporting travel services for five Western Balkan economies, in their intraregional trade and in trade in travel services with the EU. We use a gravity model, estimated over 2013–2019, applying the Poisson pseudo-maximum likelihood estimator. The results of the trade gravity model reveal that GDP, geographical distance, and cultural characteristics such as language and historical similarities and cultural heritage influence travel services.

KEYWORDS:

• Export
• gravity model
• regional integration
• travel
• Western Balkans

JEL Classification:

• F14
• F43
• F63

Disclosure Statement

No potential conflict of interest was reported by the author(s).

Notes

1. These include Albania, Bosnia and Herzegovina, Montenegro, North Macedonia, Serbia, and Kosovo* (as a separate customs territory under UN Security Council Resolution No. 1244). Croatia, which also belonged to this group, is not considered at present since it became an EU member on July 1, 2013.

2. Eurostat: GDP and main components (output, expenditure, and income) [nama_10_gdp].

3. Albania, Bosnia and Herzegovina, and Montenegro are all Mediterranean countries.

4. Source: UNWTO: International Tourism Highlights, 2019 Edition.

5. Ibid.

6. Data for Kosovo* were not available.

7. Source of data: ITC, UNCTAD, WTO trade in services database based on IMF statistics.

8. Bela Balassa (1965), defined RCA as $RC{A}_{ij}=\frac{\frac{X_{ij}}{{\sum }_i{X}_{ij}}}{\frac{{\sum }_j{X}_{ij}}{{\sum }_i{\sum }_j{X}_{ij}}}$, Where $X_{ij}$ is the exports of sector i fromcountry j; ${\sum }_i{X}_{ij}$ is the total export from country j; ${\sum }_j{X}_{ij}$ is the exports of sector i in the world, and ${\sum }_i{\sum }_j{X}_{ij}$ is the total exports in the world. The RCA index is a key indicator that measures the degree of export specialization in a particular product or industry. RCA can range from 0 to infinity. When is larger than 1, the country is said to be specialized in that sector of export, while when it is below 1, then there is no specialization.

9. Montenegro, Albania, and Bosnia and Hercegovina are Mediterranean countries.

10. The results of correlation analysis are provided in the Appendix in Table A1.

Additional information

Notes on contributors

Predrag Bjelić

Predrag Bjelić is a Full Professor at the University of Belgrade Faculty of Economics, where he teaches International Trade, EU Economics and International Economics on undergraduate program, and International Trade Policy, Electronic Commerce and International Economics on the graduate program. He received a Ph. D. in Economics from the University of Belgrade Faculty of Economics. He published numerous articles focusing on international trade and information and communication technology. Prof. Bjelic served as UNCTAD and WTO expert on trade policy courses and participated in many projects.

Danijela Jaćimović

Danijela Jacimovic is a Full Professor at the University of Montenegro Faculty of Economics, where he teaches International Economics, Globalization and International Finance. She published numerous articles focusing on international economics and China and World Economy. Prof. Jacimovic is a Chair of Jean Monnet Centre of Excellence.

Radovan Kastratović

Radovan Kastratović is an Assistant Professor at the University of Belgrade Faculty of Economics, where he teaches International Economics, International Trade, and International Business Finance on the undergraduate program, and International Economic Policy and International Economics on the graduate program. He received a bachelor’s degree in economics, a master’s degree in international economics and a Ph. D. degree in Economics from the University of Belgrade Faculty of Economics in 2015, 2016 and 2021, respectively. His main research interests include foreign direct investment and international trade.

Maja Baćović

Maja Bacovic, PhD, Full Professor at the Faculty of Economics, University of Montenegro. Her field of interest are general macroeconomics and macroeconomic statistics.