Trade Dynamics in the Euro Area: The role of export destination and composition

We investigate to what extent the destination of exports and export composition affect the export performance of euro area countries, using a dataset on exports from euro area countries to their top 20 trade partners for the period 1980-2010. Our analysis shows that European integration has not led to an increase in the share of the core and the northern periphery in the exports of the southern periphery. Our results suggest that a higher share of high tech exports in total exports leads to a higher growth of total exports. Export composition also conditions the effects of the real exchange rate and partner income growth. The effect of the real exchange rate on export growth becomes smaller the higher the share of high tech exports in total exports. The effect of partner income on export growth becomes larger the higher the share of high tech exports in total exports.
 
JEL code: F14, F15.
Key words: trade relations, export composition, euro area.

Working paper no. 354