Igor Cvečić
Marko Tomljanović
Vedrana Svilić
University of Rijeka, Faculty of Economics and Business, Ivana Filipovića 4, 51000 Rijeka, Croatia
DOI: https://doi.org/10.31410/ITEMA.2018.254

2nd International Scientific Conference on Recent Advances in Information Technology, Tourism, Economics, Management and Agriculture – ITEMA 2018 – Graz, Austria, November 8, 2018, CONFERENCE PROCEEDINGS published by the Association of Economists and Managers of the Balkans, Belgrade, Serbia; ISBN 978-86-80194-13-4


Liberalization of the world economy is a powerful and dynamic process characterized by the abolition and/or reduction of customs restrictions, which results in static and dynamic impacts that largely determine a country’s position in global trade relations. The process of liberalization also enables technology transfer and the exchange of other forms of investments in research and development ‘outcomes’, which represent the foundations of achieving a long-term economic growth and competitiveness in the modern business environment. However, the success of countries or integrations in such conditions is largely determined by the ability to adapt and to absorb positive effects of the liberalization process.

The research problem in this paper arises from the potentially negative effects of trade liberalization, especially on the loss of competitiveness of the European economy, which was mainly established through technological progress in the previous decades. The conducted research is based on the scientific hypothesis: it is possible to determine the effects of liberalization of international trade, as well as the trade agreements that the EU concludes with third countries, on the technological progress of the European economy.

With the profound ‘insight’ into the relevant literature, the authors of this paper found that most of economic theorists have so far dealt with the effects of globalization and related processes of increased levels of technological readiness on trade liberalization. In this paper an inverse approach was used in order to investigate the effects of the removal of trade barriers on achieving the technological progress of the European economy. This approach represents the fundamental scientific contribution of the conducted research. The results showed that the EU has, in the past sixteen years, along with a few rounds of enlargements, basically doubled its international trade, achieving almost constant surplus of the foreign trade balance.

Also, together with the growth of international trade, an orientation of the European economy toward modern ‘engines of growth’, particularly based on investments in research and development and their outcomes is noticeable. In the observed period, the EU achieved increased levels of: 1) investments in R&D, 2) sales of high technology products, 3) international trade of high technology products, and 4) employment in high technology sectors. The pressure of global competition and demographic changes, which can greatly slow down economic growth and innovation activities of the European economy because of their adverse effects, are recognized as the most important challenges for the EU in the future process of trade liberalization (or de-liberalization) and the achievement of technological progress.

Key words
EU, liberalization, progress, technology, trade
[1] Aghion, P., Bloom, N., Blundell, R., Griffith, R., Howitt, P. (2005) Competition and Innovation: An Inverted-U Relationship, The Quarterly Journal of Economics, Vol. 120, No. 2.
[2] Baghwatti, J. i Srinivasan, N. (2002) Trade and Poverty in the Poor Countries, The American Economic Review, Vol. 92, No. 2, pp. 180-183.
[3] Balassa, B. (1962) The theory of economic integration, Allen and Unwin, London.
[4] Barro, R.J. (1998) Notes on growth accounting, National Bureau of Economic Research, Working Paper no. 6654., Cambridge.
[5] Bečić, E., Dabić, M. (2008) Analiza ulaganja poslovnog sektora Republike Hrvatske u istraživanje i razvoj, Revija za sociologiju, Vol. 39, no 1-2, pp. 69-84.
[6] Chaudhuri, DD (2016) Impact of Economic Liberalization on Technical Efficiency of Firms: Evidence Form India’s Electronics Industry, Theoretical Economics Letters, No. 6, pp. 549-560.
[7] Dabić, M. (2007) Innovation and transfer technology: Croatian experience, paper presented at the scientific conference: Komercijalizacija i društvena primjena znanosti – indijska i hrvatska iskustva, MZOŠ i HIT, Zagreb.
[8] Damian, D., Lanubile, F., Oppenheimer, H.L. (2003) Addressing the Challenges of Software Industry Globalization, presented on the Workshop on Global Software Development, In Proceedings 25th International Conference on Software Engineering, IEEE Computer Society, Los Alamitos, pp. 793-794.
[9] Dowrick, S. (1994) Openness and Growth, Proceedings of Conference of Reserve Bank of Australia, pp. 10–41.
[10] Easterlin, R. (1981) Why isn’t the Whole World Developed?, Journal of Economic History, Vol 41, No. 1, pp. 1.-19.
[11] Eaton, B. Lipsey, R. (1975) The Principle of Minimum Differentiation Reconsidered: Some New Developments in the Theory of Spatial Competition, Review of Economic Studies, Vol. 42, No. 1, pp.27-49.
[12] Edwards, S. (1998) Openness, Productivity and Growth: What Do We Really Know?, The Economic Journal, Vol. 108, pp. 383–398.
[13] Europska komisija, 2017, available on: https://trade.ec.europa.eu/doclib/docs/2006/september/tradoc_122530.pdf
[14] Eurostat (1) (2018), available on: https://ec.europa.eu/eurostat/tgm/table.do?tab=table&init=1&language=en&pcode=tsc00031&plugin=1
[15] Eurostat (2) (2018), available on: https://ec.europa.eu/eurostat/tgm/table.do?tab=table&init=1&language=en&pcode=tsc00011&plugin=1
[16] Eurostat (3) (2018), available on: https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Production_and_international_trade_in_high-tech_products
[17] Eurostat (4) (2018), available on: https://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=nama_10_lp_ulc&lang=en
[18] Grgić, M., Bilas, V. (2012) Teorija regionalnih ekonomskih integracija, Sinergija nakladništvo, d.o.o., Zagreb.
[19] Griliches, I. (1998) R&D and productivity: The Econometric Evidence, University of Chicago Press, Chicago.
[20] Grossman G.M., Helpman E. (1991) Innovation and Growth in the Global Economy, MIT Press, Cambridge.
[21] Gualiyeva, M.G., Okb, N.I., Musayevaa, F.Q., Efendiyeva, R.J., Musayevac, J.Q., Agayevaa, S.R. (2016) Economic liberalization and its impact on human development: A Comparative Analysis of Turkey and Azerbaijan, Internatonal Journal of Environment & Science Education, Vol 11, No. 17, pp. 9753-9771.
[22] Guellec, D., van Pottelsberghe; B. (2003) The impact of public R&D expenditure on business R&D, Economics of innovation and new technology, Vol. 12, No. 3, pp. 225-243.
[23] Harrison, A. (1996) Openness and Growth: Time Series, Cross-Country Analysis of Developing Countries, Journal of Development Economics, No. 48, No. 2, pp. 419–47.
[24] Harvrylshyn, O. (1990) Trade Policy and Productivity Gains in Developing Countries: A Survey of the Literature, World Bank Research Observer, Vol. 5, No. 1, pp. 53–73.
[25] Kandžija, V. Cvečić, I. (2010) Ekonomika i politika Europske unije, University of Rijeka, Faculty of Economics, Rijeka.
[26] Kandogan, Y. (2003) Technological Progress Through Trade Liberalization in transition Countries, William Davidson Working Paper Number 567, University of Michigan Business School.
[27] Krstić, B., Džunić, M. (2014) Analysis of the Western Balkan countries’ competitiveness determinants using the KEI methodology, Ecoforum, Volume 3, issue 2.
[28] Mahadevan, R. (2002) Trade Liberalization and Productivity Growth in Australian Manufacturing Industries, Atlantic Economic Journal, Vol. 30, No.2, pp. 170-185.
[29] Meade, J.E. (1955) Trade and Welfare, Oxford University Press, London, New York.
[30] Mincer, J. (1974) Schooling, Experience and Earnings, NBER Press, New York.
[31] Pereira, J., Aubyn, M., St. (2009). What Level of Education Matters Most For Growth? Evidence From Portugal, Economics of Education Review, 28:1, pp. 67-73.
[32] Prodanović, S., Petković, D., Bašić, H. (2013) Istraživanje inovacionog potencijala BiH s aspekta upravljanja i odlučivanja o RDI aktivnostima, presented at the 8th International Conference ”KVALITET 2013”, Neum.
[33] Rodrik, D. (1992) The Limits of Trade Policy Reforms in Developing Countries, Journal of Economic Perspectives, Vol. 6, No. 1, pp. 87–105.
[34] Romer, P.M. (1986) Increasing Returns and Long-Run Growth, Journal of Political Economy, Vol. 94, No. 5, pp. 1002-37.
[35] Solaki, M. (2013) Relationship Between Education and GDP Growth: A Bi-variate Causality Analysis for Greece, International Journal of Economic Practices and Theories, Vol. 3, No. 2, pp. 133-139.
[36] Stevens, P., Weale, M. (2003) Education and economic growth, National Institute of Economic and Social Research, London.
[37] Švarc, J. (2014) A Triple Helih systems approach to strengthening innovation potential of the Western Balkan countries, International Journal of transitions and Innovation system, Vol. 3., No.2.
[38] The World Economic Forum (2018), available on: https://www.weforum.org/
[39] Tinbergen, J. (1957) The appraisal of road construction: two calculation schemes, The review of economies and statistics, Vol. 39, No. 3, pp.241-249.
[40] Tybout, J. R. (1990) Making Noisy Data Sing: Estimating Production Technologies in Developing Countries, Journal of Econometrics, Vol. 53, No. 1-3, 1990, pp. 25–44
[41] Viner, J. (1950) Custom Union Issue, Carnegie Endowment for International Peace, New York.
[42] World Bank (1) (2018), available on: https://data.worldbank.org/indicator/GB.XPD.RSDV.GD.ZS
[43] World Bank (2) (2018), available on: https://data.worldbank.org/indicator/TX.VAL.TECH.MF.ZS
[44] World Bank (3) (2018), available on: https://tcdata360.worldbank.org/indicators/TX.VAL.TECH.MF.ZS?country=BRA&indicator=2010&viz=line_chart&years=1988,2016
[45] World Bank (4) (2018), available on: https://data.worldbank.org/indicator/NE.TRD.GNFS.ZS
[46] World Bank (5) (2018), available on: https://data.worldbank.org/indicator/NE.EXP.GNFS.ZS
[47] World Bank (6) (2018), available on: https://data.worldbank.org/indicator/NE.IMP.GNFS.ZS
[48] World Bank (7) (2018), available on:
[49] https://data.worldbank.org/indicator/NE.RSB.GNFS.ZS
[50] World Bank (8) (2018), available on: https://data.worldbank.org/indicator/BX.KLT.DINV.WD.GD.ZS
[51] World Bank (9) (2018), available on: https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG


Association of Economists and Managers of the Balkans – UdEkoM Balkan
179 Ustanicka St, 11000 Belgrade, Republic of Serbia

ITEMA conference publications are licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.