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The Cost of Fence-Sitting: A counterfactual analysis of Ukraine’s non-integration with the EU

Hansen, Eric LU (2023) NEKP01 20231
Department of Economics
Abstract (Swedish)
This paper provides an estimate of the export flows that would have emerged from Ukraine to the European Union (EU) had Ukraine integrated with the EU. Using the 2004 enlargement of the EU as a quasi-natural experiment, this paper employs the Synthetic Control Method (SCM) to estimate the counterfactual Ukrainian export flows to the EU. The results from the SCM shows that the aggregate export flows from Ukraine to the EU would have been 34.6% higher if Ukraine had joined the EU in 2004. In addition, the positive export effects are estimated to reach about 40.4% in the latter part of the post-treatment period. The results are robust to standard sensitivity checks. The results are supplemented by a Difference-in-differences (DiD) estimator.... (More)
This paper provides an estimate of the export flows that would have emerged from Ukraine to the European Union (EU) had Ukraine integrated with the EU. Using the 2004 enlargement of the EU as a quasi-natural experiment, this paper employs the Synthetic Control Method (SCM) to estimate the counterfactual Ukrainian export flows to the EU. The results from the SCM shows that the aggregate export flows from Ukraine to the EU would have been 34.6% higher if Ukraine had joined the EU in 2004. In addition, the positive export effects are estimated to reach about 40.4% in the latter part of the post-treatment period. The results are robust to standard sensitivity checks. The results are supplemented by a Difference-in-differences (DiD) estimator. The DiD estimator suggests that the non-integration of Ukraine lowered potential exports by 31.9% These results are strongly consistent in magnitude compared to the results from the baseline SCM estimation, although the size of the effects varies less over time in the DiD estimation. The results suggest that Ukraine paid a heavy price in terms of exports, as a result of its non-integration with the EU. (Less)
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author
Hansen, Eric LU
supervisor
organization
course
NEKP01 20231
year
type
H2 - Master's Degree (Two Years)
subject
keywords
Exports, European integration, Ukraine, Synthetic Control Method, Difference-in-differences
language
English
id
9122572
date added to LUP
2023-06-19 10:03:52
date last changed
2023-06-19 10:03:52
@misc{9122572,
  abstract     = {{This paper provides an estimate of the export flows that would have emerged from Ukraine to the European Union (EU) had Ukraine integrated with the EU. Using the 2004 enlargement of the EU as a quasi-natural experiment, this paper employs the Synthetic Control Method (SCM) to estimate the counterfactual Ukrainian export flows to the EU. The results from the SCM shows that the aggregate export flows from Ukraine to the EU would have been 34.6% higher if Ukraine had joined the EU in 2004. In addition, the positive export effects are estimated to reach about 40.4% in the latter part of the post-treatment period. The results are robust to standard sensitivity checks. The results are supplemented by a Difference-in-differences (DiD) estimator. The DiD estimator suggests that the non-integration of Ukraine lowered potential exports by 31.9% These results are strongly consistent in magnitude compared to the results from the baseline SCM estimation, although the size of the effects varies less over time in the DiD estimation. The results suggest that Ukraine paid a heavy price in terms of exports, as a result of its non-integration with the EU.}},
  author       = {{Hansen, Eric}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{The Cost of Fence-Sitting: A counterfactual analysis of Ukraine’s non-integration with the EU}},
  year         = {{2023}},
}