The Impact of Euro in the Balance of Trade (BOT): the Iberian case, Spain-Portugal

Abstract

This contribution analyses the balance of trade (BOT) between Spain and Portugal, during the period 2000-2014, since the implantation of euro and the simplification of commercial-administrative relations. Initially, trade relations between both countries were clearly positive, essential due to the economic growth, almost fully globalized. This allowed the consolidation of both countries in the European Union, within the single market and common currency. Nevertheless, the economic crisis in the last years motivates a dissimilar decline of trade relations and BOT. A methodology measuring the Trade Openness, through the ratio of exports and imports of goods in relation to GDP, is implemented. Also, the nature of the traded goods is evaluated and the impact of the geographical proximity of both country regions’ is studied. As a major conclusion, the performed analysis point out that the geographical closeness cannot be considered a core reason to explain the observed trade indicator values.