Analysis on International Trade of CLM Countries (original) (raw)
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Journal of Economics and Sustainable Development
Due to the relatively low levels of bilateral trade flows observed within the CEMAC bloc as well as the poor rates of economic growth observed in CEMAC member States, the study aimed to examine the determinants of bilateral trade flows within the CEMAC bloc using the Augmented Gravity model as the main theoretical framework. While secondary data for bilateral trade was obtained from IMF's Direction of Trade Statistics, secondary data for Gross Domestic Product (GDP), population size and investment in fixed capital were obtained from the World Bank's World Development Indicators and data for distance and CEMAC dummy were obtained from the Institute for Research on the International Economy (CEPII). Using the Pseudo-Poisson Maximum Likelihood (PPML) technique, the results of the study conclude that while GDP of exporting country, GDP of importing country, the existence of a border between exporting country and importing country, population of exporting country, population of importing country, physical capital of exporting country and physical capital of importing country all have positive and significant impact on bilateral trade flows within the CEMAC bloc, distance between exporting country and importing country and the creation of CEMAC as a trade bloc all have negative and significant impact on bilateral trade flows within the CEMAC bloc. Finally, the study recommends that policy makers of the CEMAC trade bloc design and implement policies and measures that are geared towards boosting the GDP of member States, investing in national and regional infrastructural projects, eradicating barriers at their respective borders, investing in the acquisition and transfer of technical and technological skills, harmonizing regional financial, economic, legal and trade policies and improving the business (investment) climate.
CARICOM Bilateral Trade: A Preliminary Analysis Using the Gravity Model
2002
This paper investigates the determinants of intra-CARICOM bilateral trade and the CARICOM member's trade with the North American and European countries using the gravity model. Seventeen annual cross-sections are estimated for the period 1980 through 1996. Overall, the empirical results indicate that the gravity model has considerable potential to explain intra-CARICOM bilateral trade as well as trade between CARICOM members and non-members. The evidence suggests that both the importer's GDP per capita and the exporter's GDP per capita exert strong positive effects on CARICOM trade levels. Since these effects are found to be statistically the same, we conclude that the gravity model is symmetric with respect to GDP per capita. Further, sharing a common language, colonial ties, or membership in the CARICOM all significantly contribute to larger volumes of bilateral trade, while geographic distance has the opposite effect. Both the exporting and the importing countries'...
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.
Intra OIC-Region Trade: Application of Gravity Model
Journal of Islamic Business and Management, 2021
Purpose: This study analyses the international trade among members of the Organisation of Islamic Cooperation (OIC) and documents the significant contributing factors. Methodology: Our sample includes 49 OIC-members (located from Southeast Asia to South America). The extended gravity model of international trade is applied to identify the determinants of intra-OIC region trade on the recent five years data (2014-18), at the time research conducted. Exports are used as proxy for the international trade between a pair of trading partners. Findings: Evidence supports the application of the basic gravity model in explaining trade variations within the OIC region. GDP contributes positively while distancing negatively. Common language contributes positively to trade flows. Shared borders and Inflation (importer and exporter) turned insignificant. Trade volume among OIC member countries is less than potential. Recommendations: OIC economies need to focus on growth through the production of value-added commodities-leading to an increase in international trade. Furthermore, surplus capital within the region may be shifted to economies with scarce capital. Significance: To the best of author's knowledge, this is the only effort to present a comprehensive analysis of international trade within the OICregion through the application of the gravity model in recent years.
Trade in South Asian Region (SAARC)-Evidence from Gravity Model
soegw.org
South Asian Association for Regional Cooperation (SAARC) is a relatively young economic integration project and appears to be very small compared to other existing regional blocks. This might be because of unexplored intra regional trade opportunities. It is general economic perception that the increase in international trade might be welfare improving. This paper attempts to make a formal analysis of these issues with the use of a gravity model of international trade. The objective is to examine whether intra-SAARC trade is lower or higher than what is predicted by an economic model. This gives an idea about the structure of comparative advantage in the SAARC countries that helps to explain why intra-SAARC trade is low and how trade among them can be increased. It also helps us to understand the possibility of trade creation and trade diversion effect resulting from South Asian Free Trading Arrangements (SAFTA). We also explain geo-political reasoning for more economic cooperation among the SAARC countries, suggesting areas where cooperation could be mutually beneficial to the economies. The gravity model has been exclusively used to measure bilateral trade among countries but not effectively used to measure intra-SAARC trade. Our gravity model results suggest that SAARC member countries are yet to accomplish trade-creating benefits. Appropriate policies need to be formulated for more regional integration. Liberalization of trade in SAARC countries offers significant gains for all the economies in the region. Efforts should be made to liberalize border trade and strengthen bilateral trade relations through the removal of tariff and non-tariff barriers in the general framework of South Asian Free Trading Arrangements.
Determinants of Trade Flows among D8 Countries: Evidence from the Gravity Model
Journal of Economic Cooperation and Development
A special grouping within the Organisation of Islamic Countries (OIC)the so called D8 Group comprises of eight developing countrieshas formed an economic development alliance. Among its objectives are to improve member countries' positions in the world economy, diversify and create new opportunities in trade relations, and enhance participation in decision-making at the international level. In this context, the present paper identifies the factors affecting export flows among the D8 countries. The results from a gravity model, which is estimated using Panel Correlated Standard Errors (PCSE), demonstrate that the trading partners' Gross Domestic Product (GDP), exchange rate, population of exporter country, border and distance are the notable factors affecting the volume of export flow among the countries in the D8 group. In line with the results, the countries would do better if they focus on exporting more to their neighbouring countries within the group and also undertake the measures which ensure low transportation costs. Additionally, the currency depreciation would increase the trade flows among the members when other adverse effects are taking into account.
Effects of regional trading agreements on South Asian trade: a Gravity model analysis
Tropical Agricultural Research, 2015
Regionalism in South Asia, through formation of regional and bilateral trading agreements, dates back to mid 1990s. The objective of this study is to assess the effects of various forms of trade agreements on bilateral trade of South Asia. Gravity model of international trade was used as the analytical tool and the effects of the World Trade Organization (WTO), Regional Trade Agreements (RTA) such as SAFTA, EU, ASEAN, BIMSTEC and NAFTA, and Bilateral Trade Agreements (BTA) were estimated. Three types of BTAs were included; between two South Asian countries, between a South Asian country and a country not in the region, and between two non-South Asian countries. Distance between the trading partners, sharing of common language, and colonial ties were the remaining explanatory variables included in the models. Cross sectional data covering 2555 bilateral trade for the year 2012 were used for the estimation and the data were extracted from the gravity databases of the Asia Pacific Research and Training Network, the World Bank and the WTO. The models were estimated using Ordinary Least Squares including importer and exporter fixed effects. The results of the estimation suggest that sharing of a common language, sharing a common colony, and membership of WTO positively and significantly affect export values and the effect of geographical distance, as expected, on the same has a negative effect. The memberships in BTA and RTA have mixed effects. Among RTAs used in the study, only the coefficient for EU is statistically significant. SAFTA, ASEAN, BIMSTEC and NAFTA do not show significant effects on bilateral trade. The effects of all BTAs are positive and significant and they indicate that BTAs within South Asia enhance its regional trade greater than the BTAs with non-members. These results suggest that proliferation of BTAs within South Asia helped in expanding regional trade.
International Journal of Foreign Trade and International Business, 2020
South Asian Association for Regional Cooperation (SAARC) was established in 1985. One of the major objectives of SAARC was to improve economic growth and development in South Asian countries. This study aims to examine the bilateral trade flows between India and selected SAARC nations for the period of 1996-2018. Gravity model of trade is used to determine the trade flow. The findings of this study have shown that the trade flow depends positively on GDP of host nation and partner nation. This study makes use of panel data analysis for double log function of Gravity model for trade between India and selected SAARC nations. Study used annual data of SAARC countries except Afghanistan due to unavailability of Data. Study analyzed data for India's bilateral trade from 1996 t0 2018 for 6 countries and tested three econometric models to assess the impact of income of both nations, per capita, inflation, and trade openness on bilateral trade between India and SAARC. Study is intended to know the existence of H-O model or Linder model in the trade between India and SAARC. Study found that SAARC countries highly open in bilateral trade with India. Countries income is also increasing in bilateral trade with India. The income differential of SAARC countries indicates that there is the presence of Linder model of International trade. Study used Panel data analysis and FEM model to assess the effects of bilateral trade between India and SAARC countries. Introduction India is the member of SAARC since year 1985 from it's the year of formation and this covers world's 23 per cent population and 15% of the world's arable land but only 6% of purchasing power parity and 3% of world's foreign direct investment. South Asia is one of the emerging regions who achieved an average of 6.45 per cent of GDP growth rate and 5.1 GDP per capita growth rate in the last five years. India, Bhutan and Bangladesh have shown a significant improvement in the last decade. India as a part of SAARC is improving in both income and export growth while trade with SAARC nations. India's trade with SAARC nations is explained by the following graphs:
THE GRAVITY MODEL OF TRADE: THE CASE OF CENTRAL AND EASTERN EUROPE
LeXonomica, 2022
The main patterns of international trade in the countries of Central and Eastern Europe have been analysed in the paper. The gravity model, estimated for a large sample of bilateral trade flows for the analysed states, has been used as a benchmark. The model has been updated according to the modern conditions in the international economy. The emphasis has been made on the analysis of products' trade since the trade of services requires separate modelling. The purpose of the paper was to find the main factors that determine gravity trends in international trade in Central and Eastern Europe. It has been proven that the distance between countries and their gross domestic products are still crucial factors which determine trade flows between them. Additionally, the influence of the product structure of export has been considered. A higher share of value-addedexport increases bilateral trade between the countries. Common past for the analysed countries boosts trade between them because of the presence of historical trade traditions and the development of regional production agglomeration. It has been proven that the gravity equation remains a simple and reliable model of the factors which determine the trade between countries.