EU Enlargement and Regional Trade Effects: How have Western Balkan exports been affected by the Croatian EU membership?

This thesis examines the effects of European Union integration on exports, focusing on the most recent EU enlargement involving Croatia. In addition to assessing the direct impact of EU accession on Croatian exports to the EU, the study investigates potential spillover effects on exports from the Western Balkan Six (WB6) countries relative to a control group. The empirical strategy combines fixed-effects regressions with Poisson Pseudo-Maximum Likelihood estimation to account for unobserved heterogeneity and heteroskedasticity. Event studies are also conducted to examine the dynamic effects of EU integration. The event studies also evaluate the plausibility of the parallel trend assumption which enables the difference-in-differences framework. The results indicate positive effects on exports for both Croatia and the WB6 countries relative to the control group. However, the presence of pre-treatment differences suggests that the assumption of parallel trends for Croatia should be interpreted with some caution. The findings suggest that EU enlargement has contributed to increased exports, not only for the acceding country but also for neighbouring non-member countries. These results contribute to the discussion on future EU enlargement by highlighting the potential importance of spillover effects on export performance.