Analysis of the comparative advantages and intra-industry trade between the European Union and the Eurasian Economic Union at the current phase

The development of foreign trade relations between the European Union (EU) and the Eurasian Economic Union (EAEU) is influenced by many historical, political, economic, and other factors. The EU considers the EAEU an important partner in terms of imports of strategic raw materials and geographic interconnections on the Eurasian continent. The European Union has a long-term negative trade balance with the EAEU. Mutual foreign trade relations were significantly influenced not only by the sanctions between the EU and Russia but also by the unfavorable price dynamics in the world energy commodity markets, which led to a reduction in their mutual trade. There has been a steady decline in the development of the EU’s comparative advantages over the EAEU. The EU has the largest revealed comparative advantage in machinery and transport equipment, which is also its largest export article. On the contrary, it has the greatest comparative disadvantages in the case of mineral fuels, which account for almost 70% of total EAEU imports. Analysis of intraindustry trade shows that growth is observed in almost all groups, with the greatest growth in food, beverages, and tobacco. Intra-industry trade between the EU and the EAEU is of greatest importance in the group of other goods. In the case of mutually beneficial trade relations between the EU and the EAEU, it is necessary to remedy the geopolitical and geo-economic context and transform the economies under review. At the same time, in connection with the current COVID-19 pandemic, one can expect a significant restructuring of the global economic system aimed at achieving the main goals of economic policy,  such as sustainable, non-inflationary economic growth and low unemployment, what will significantly affect the mutual trade relations of the considered integration groups.

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