Interregional trade estimation as a case for economic integration

Abstract

This paper explores the estimation of interregional trade as a lens through which to assess the broader dynamics of economic integration, with a particular emphasis on the persistent "border effect" in the European Union (EU). Although regional integration is intended to foster seamless economic flows through policy convergence and infrastructural alignment, empirical evidence reveals significant barriers to cross-border trade. These frictions (both tangible and intangible) challenge the assumption of a borderless economy within integrated regions. Through a systematic literature review guided by the PRISMA methodology, the study examines the evolution of trade estimation techniques, focusing on the gravity model as the dominant analytical framework. The review highlights key methodological innovations, including hybrid gravity-input-output models, RAS calibration, and spatial econometrics, as well as sectoral and regional applications that expose asymmetries in trade flows. By synthesizing findings from peer-reviewed sources and academic research, the paper reveals the multidimensional nature of border effects and the uneven outcomes of integration policies. The analysis is complemented by references to grey literature, mainly policy documents, allowing to set the societal relevance of the research. It concludes that while gravity models remain central to trade analysis, their future relevance depends on incorporating behavioural, infrastructural, governance and political dimensions. This work contributes to ongoing academic and policy debates by advocating for a more nuanced, interdisciplinary approach to understanding economic integration in an increasingly fragmented yet interconnected world.