Academia de Studii Economice Bucuresti

Amfiteatru Economic
AN ECONOMIC AND BUSINESS RESEARCH PERIODICAL
Facultatea de Business si Turism

A Study of Trade Complementarity between China and the Baltic States and its Development Strategies

Author:Xiaosong Zheng, Lijun Jia, Jiawen Bao and Jiao Chen

JEL:F13, F14

DOI:10.24818/EA/2018/49/788

Keywords:Baltic States, China, complementarity, trade potential, trade gravity model

Abstract:
The paper mainly studies trade complementarity between China and three Baltic States, namely Lithuania, Latvia and Estonia. The paper first introduces China and the three Baltic States’ current trade situation. It then makes an empirical analysis on the trade complementarity between China and the three Baltic States by using models of revealed comparative advantage (RCA) and trade complementarity index (TCI) respectively, which reveals that complementarities of China to the Baltic States are mainly in the labor-intensive products, while complementarities of the three Baltic States to China are in the resource-intensive products. However, the current structure of imported goods from the Baltic States to China is different from the results of complementarity analysis. In this study an expanded trade gravity model is used to analyze trade potential, which helps to develop feasible trade strategies and it shows that trade between China and the Baltic States needs to be fully exploited.
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