Employing Gravity Model to Measure International Trade Potential (original) (raw)
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TRADE ANALYSIS OF FRESH APPLE USING A GRAVITY MODEL
This thesis explores the use of a gravity model (GM) to analyze the determinants of trade for specific products. Using a panel data for the twenty most important trader countries on ten years (2001)(2002)(2003)(2004)(2005)(2006)(2007)(2008)(2009)(2010), fresh apple is used as an empirical example. The results indicated the importance of the traditional gravity model variables. We also noted that the tariff have not yielded the desired effect in this trade. The results also show the importance of language and weather in the trade. Finally, we noted that regional trade agreements had a negative (but not significant) effect on bilateral trade flows. We have also seen that all the effects of trade diversion are negative in nature (NAFTAD, EUD).
Applying Gravity Model to Analyse Trade Direction
Tehnicki Vjesnik-technical Gazette, 2020
The application of Newton's law of gravity in explaining international trade proved to be very successful. The popularity of a gravity model for explaining trade flows has been due to the fact that the calculations require affordable data for every economy. The basic elements of the panel gravity model are mainly GDP, population and distance. This paper analyses Serbia's trade from 2001 to 2018 based on the experience of neighbouring countries of Croatia and Romania, using STATA software. The trade exchange with more distanced EU members is less realized. The country tends to trade much more with its neighbouring EU members, proving the basic assumption of a gravity model. There are exceptions regarding some parts of the trade with developed EU economies, regardless of their distance. These relations will help us to evaluate the trade pattern and direction of Serbian trade in the EU accession process using a gravity model.
APPLYING GRAVITY MODEL TO ANALYZE TRADE ACTIVITIES OF VIETNAM
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The Gravity Model of Indonesian Bilateral Trade
International Journal of Social and Local Economic Governance, 2015
This study aims to examine the trade of Indonesia with 10 top export partner using the gravity model of trade. The panel regression analysis with fixed effect model was conducted in order to acknowledge the relationship among the variables Constant Gross Domestic Product, Per Capita Gross Domestic Product, transportation cost, and Real Effective Exchange Rate on export of Indonesia with 10 partners. This study used secondary data with panel regression analysis and research instruments which tested using chow test, hausman test and classical assumption test. The panel regression result showed that simultaneously and partially Constant Gross Domestic Product, Per Capita Gross Domestic Product, transportation cost and Real Effective Exchange Rate had significant effect on export of Indonesia.
EuroEconomica, 2011
World trade has grown rapidly. Several factors are highlighted by literature as the driving forces behind the growth of world trade. Reductions in barriers to trade are one of them. A comprehensive empirical investigation is carried to ascertain the trade reducing and increasing effect of barriers to trade and facilitators to trade. The new version of gravity model is developed in the connections in this study while analyzing the effect of GDP, distance, remittances, FDI, transportation cost, exchange rate, inflation, population, import and export of specifically trading partners on trade flows during bilateral trade. The study revealed that the developed version of gravity model explains the trade flows substantially and vigorously for the nations from developed world than for the nations from developing world.
Analysis of Fijis Regional Trade Using Gravity Model
Open Journal of Business and Management, 2022
Regional trade is equally important for countries as international trade. The Pacific Islands Forum Secretariat (PIFS) is the body that facilitates regional trade in the Pacific by implementing and upholding free trade agreements between its member countries. This paper looks at the trade agreements that Fiji is part of and determines the export levels of commodities trade with its regional partners. Fiji's export in 2019 totals 1,032,914.40(USthousand)ofwhichapproximatelyforty−onepercent(40.851,032,914.40 (US thousand) of which approximately forty-one percent (40.85%) is exported to regional countries. Its leading export commodity to regional countries in 2019 includes food products and fuel worth 1,032,914.40(USthousand)ofwhichapproximatelyforty−onepercent(40.8572,228.62 (US thousand) and $70,818.74 (US thousand) respectively.
An Analysis of International Raisin Trade: A Gravity Model Approach
2013
and the United States. Raisin is one of the top Turkish export products. Turkish raisin sector is facing an increasing competition in international markets. The aim of this work is to explain the magnitude of the trade flows for raisin from Turkey and other exporting countries to its main importing countries. This objective has been reached by establishing an appropriate econometric model derived from an extended form of the "Gravity Model". To apply gravity model, a panel data with the most important six exporters of raisin and their importing countries between the years of 1999-2008 were set up. Panel data models estimated with pooled ordinary least squares and fixed effects model under some diagnostic tests. Finally, some proposals and suggestions are developed for increasing the international competitiveness of the raisin production.
A gravity model of exports by Chile
A gravity model of exports by Chile, 2023
This research paper applies the gravity model of international trade to Chile. It is based on data from 2021, the latest year of which all data was available. We provide an overview of the origin and the collection of the data used, an explanation on the theoretical framework of the gravity model, the application to Chile and a discussion of the results. The theory states that export trade flows are influenced by variables such as economic size of trade partners and the distance to them. The obtained results for Chile are in line with the theory of the gravity model.
2018
The aim of this paper intended to determine predictive power of the gravity model in the Zambian case, to test the validity of the gravity model in explaining trade patterns between Zambia and Her top 5 trade partners and to determine the relationship between remoteness and trade flow in Zambia. Zambia's ratio of trade in goods and services to GDP (82% in 2014) suggests that trade is important to its economy. Copper continues to be by far the top export earner (accounting for over 70% of the value of merchandise exports). Its imports are more diversified and consist mainly of machinery, transport equipment, and oil and automotive products. (Key non-traditional export products comprise mainly Agricultural commodities, Agro-Processed products and manufactured goods). Africa is the leading source of Zambia's imports, with South Africa and the Democratic Republic of the Congo leading the way. Europe remains the top destination for its exports and, in particular, Switzerland, the single most important destination. The study used panel data from 1996 to 2015 The empirical results indicate that Zambia’s GDP per capita, remoteness, other countries remoteness and GDP per capita, and distance have strong and significant effects on trade volume. One explanatory variable, other Countries GDP per capita do not significantly affects trade volumes between Zambia and her trading partner. The conclusion of this study is that the Gravity model has a better predictive power and it is valid in explaining Zambia’s bilateral trade. The other conclusion drawn in that Zambia is relatively remote to the rest of the world and other countries are relatively remote to the rest of the world but not remote with respect to Zambia.
Using Gravity Model to Analyze Romanian Trade Flows between 2001 and 2015
ECONOMIC COMPUTATION AND ECONOMIC CYBERNETICS STUDIES AND RESEARCH
The main aim of the paper is to analyse the factors which influence the dimension, dispersion and the level of efficiency of Romania's trade flows in the 2001-2015 period. We have conducted a statistical analysis using EViews, which employed the Panel Least Squared method and the Estimated Generalized Least Squared method. We also provided a critical review of the literature covering the gravity model. Some of the questions we touch upon in this paper are: the variables for similarity as predictors of trade flows, the matrix which synthesizes the differences between potential and actual trade flows and the magnitude of convergence at trade flow level. We focused our discussion on the trade flows between Romania and specific countries for a period which stretches for fifteen years. Our primary scientific goal was to provide an overview of Romanian's recent trade flows and to propose some new predictors for the international flows of goods and services. We want to point out that the conclusions which stem from our empirical study are contingent on the relatively short period we examined and that future research may be considered extending the reference period in order to refine the results of the gravity model further.