Abstract

The present paper considers the foreign trade of the German state Saxony with 38 countries combine over 10 years to explain the export volume in these countries using a generalized gravity approach. As one of Germany’s “new federal states”, Saxony had been part of the Eastern Bloc until it became part of the European Union by the reunification of Germany in 1990. The purpose of this paper is to analyze the effects of the accession to the European Union on Saxony’s trade structure. By analyzing Saxony’s trade relations with the Central and Eastern European countries, which became part of the European Union between 2004 and 2007, it can be shown that the Saxon exports to these countries were higher than average during the observed time. The results indicate that there are positive effects for China and Russia as well.