World economy and international economic relations

Modeling of development processes of bilateral trade and economic integration between countries

Economic Annals-XXI

Economic Annals-ХХI: Volume 168, Issue 11-12, Pages: 18-23

Citation information:
Yatsenko, O., Meyers, W. H., Iatsenko, O., & Biletska, I. (2017). Modeling of development processes of bilateral trade and economic integration between countries. Economic Annals-XXI, 168(11-12), 18-23. doi: https://doi.org/10.21003/ea.V168-04

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Olha Yatsenko
D.Sc. (Economics),
Professor,
Kyiv National Economic University named after Vadym Hetman
54/1 Peremohy Ave., Kyiv, 03680, Ukraine
yacenko_olga@ukr.net
ORCID ID: http://orcid.org/0000-0003-4399-2217

William H. Meyers
PhD (Agricultural Economics),
Howard Cowden Professor of Agricultural and Applied Economics,
Director, College of Agriculture, Food and Natural Resources (CAFNR) International Programs,
University of Missouri;
Adjunct Professor, School of Economics, Management and Statistics,
University of Bologna
USA, Columbia, MO 65203
meyersw@missouri.edu
ORCID ID: http://orcid.org/0000-0003-0952-5578

Olexander Iatsenko
PhD Student (Economics),
Kyiv National Economic University named after Vadym Hetman
54/1 Peremohy Ave., Kyiv, 03680, Ukraine
olexandr_yatsenko@ukr.net
ORCID ID: http://orcid.org/0000-0002-0388-728X

Ivanna Biletska
PhD Student (Economics), 
Kyiv National Economic University named after Vadym Hetman
54/1 Peremohy Ave., Kyiv, 03680, Ukraine
ivanna_biletska@ukr.net
ORCID ID: http://orcid.org/0000-0003-0689-2006

Modeling of development processes of bilateral trade and economic integration between countries

Abstract. The article dwells upon the main stages of analyzing economic effects of the free trade area between countries, while reviewing features of bilateral trade and economic cooperation between Ukraine and Canada in terms of global transformations. The article identifies opportunities and threats as well as strengths and weaknesses of bilateral relations under contemporary integration processes, while also providing substantiation of the promising areas of bilateral trade and economic cooperation between countries.

The article comprises a gravity model and a forecast of quantitative indicators related to bilateral trade between Ukraine and Canada for the period of up to 2021 developed by the authors based on this model. Using the gravity modeling method, the impact of economic crisis manifestations in Ukraine and Canada on trade turnover between them has been assessed, while a conclusion has been drawn that the greatest impact on bilateral trade is produced by Canada’s GDP, whereas the change in price of logistical costs produces little effect on the turnover. The quantitative indicators of foreign trade between the two countries have been forecast under two scenarios: without the free trade area and with the latter created in 2017. Under the first scenario, a slight increase in trade turnover is expected due to the slow growth of GDP values both in Canada and Ukraine. Under the second scenario, by 2021 the trade turnover between the countries will increase twice and amount to USD 411 million.

Keywords: Canada; Ukraine; Trade; Bilateral Relations; Trade and Economic Cooperation; Free Trade Area (FTA); Agreement; Gravity Model; Integration

JEL Classіfіcatіon: C23; F15; F17

DOI: https://doi.org/10.21003/ea.V168-04

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Received 15.06.2017

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