Journal articles: 'Gravity model of international trade'

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Sejdini, Abdulmenaf, and Ilirjana Kraja. "International Trade of Albania. Gravity Model." European Journal of Social Sciences Education and Research 2, no. 1 (December 30, 2014): 220. http://dx.doi.org/10.26417/ejser.v2i1.p220-228.

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Today we live in a world where such economic globalization and technological developments have created many advantages but also shortcomings regarding social and economic development of different countries of the world. Since the beginning of the transition until the trade regime now, our country has undergone profound changes. Therefore, the aim of this paper is to see the major development steps of international trade in Albania over the years and look at the key factors that have contributed to it. The paper provides some theoretical and empirical considerations regarding trade development with the focus on export-imports in our country in relation to the Free Trade Agreements, as these have affected Albania's international trade. Specifically, it offers an application of the Gravity Model of Trade for Albanian case in relation to its 27 export/import countries. The findings from the model application result in stable trade flows for Albania.

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Shah Zainal Abidin, Irwan, Muhammad Haseeb, Lee Wen Chiat, and Md Rabiul Islam. "Determinants of Malaysia – BRICS trade linkages: gravity model approach." Investment Management and Financial Innovations 13, no. 2 (July 14, 2016): 389–98. http://dx.doi.org/10.21511/imfi.13(2-2).2016.14.

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The main objective of this study is to explore the long-run and short-run relationship between trade and other macroeconomic variables of Malaysian and the BRICS countries. To test relationship between trade and other macroeconomic variables, the empirical investigation will be conducted based on the dynamic ordinary least square (DOLS) and fully modify ordinary least square (FMOLS) model for the period 1980-2015. Results of both DOLS and FMOLS show that out of all the variables included in the model distance between Malaysia and BRICS countries and corruption of both side have negative affect on bilateral trade between them. Whereas, GDP, GDP per capita and trade to GDP ratio are positively contribute in the bilateral trade. However, inflation and exchange rate of Malaysia and BRCIS countries have no effect on the bilateral trade between Malaysia and BRICS countries. The findings suggest that economic strengthening as the basis for increase in trade between Malaysia and BRICS members. Investment appears to be complementary to the trading relations in the Malaysia-BRICS case. The social capital also plays role in supporting the trade

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DINCER, Gonul. "The Gravity Model in International Trade Theory." Ekonomik Yaklasim 24, no. 88 (2013): 1. http://dx.doi.org/10.5455/ey.35200.

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Shahriar, Saleh, Lu Qian, Sokvibol Kea, and Nazir Muhammad Abdullahi. "The gravity model of trade." Review of innovation and competitiveness 5, no. 1 (2019): 21–42. http://dx.doi.org/10.32728/ric.2019.51/2.

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Purpose. The purpose of this study is to trace the theoretical developments of the gravity model of trade. The key question is: what are the dominant features of the development of the gravity trade model? Methodology. This research is conducted by employing a number of methods that include the historical, descriptive and analytical methods. The main contribution of this paper is to trace the historical and theoretical development phases of the gravity model. Findings. This study is a novel attempt in terms of the identification of the four distinctive phases of the development of the gravity model. This work would, therefore, expand the existing literature on the gravity model. We argue that the development of the gravity model is the outcome of many research efforts. A large body of literature has given the model a solid theoretical foundation. But there is no consensus about the proper econometric estimation methods of the model. The gravity model is significant both historically and analytically. It is a useful tool for the analysis of international trade. It has become a popular research device used by the researchers and policy makers around the world. The gravity is regarded as one of the most successful models in the literature of international economics. Originality. The original contributions of this paper lie in streamlining the consistent historical development of the gravity model over a longer period of time-frame, ranging from 1885 to 2018. Limitations and Implications. This work is theoretical aspects of the trade gravity model. Future researchers could overcome the limitations by combining the theoretical and empirical studies in a paper. This paper can help the future researchers in dealing with the broad body of literature of gravity model. Acknowledement. This study was supported by the National Natural Science Foundation of China (grants No.71673223 & 71473197), and a PhD scholarship from the China Scholarship Council (CSC). The first author would like to thank the CSC for the financial support. He also acknowledges the invaluable research advice and guidance received from Dr. Yoto V. Yotov, professor at the School of Economics of the Lebow College of Business at Drexel University, Philadelphia, USA. The authors are highly grateful to the anonymous reviewers, managing editor, and the editor-in chief for their kind help and critical comments on the earlier drafts of the paper. However, the authors are responsible for the contents and limitations of the study. They declared no conflict of interests.

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Okhotnikov, Alexander, Muhammad Imtiaz Subhani, Shatila Khodor, and Denis Ushakov. "Gravity model and Pakistan - China Trade." E3S Web of Conferences 258 (2021): 06036. http://dx.doi.org/10.1051/e3sconf/202125806036.

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Pakistan being an important ally of the war against terror paying huge price of not merely of innocent lives of people but huge monetary losses in many sectors of economy, one lucrative sector is international trade. Pakistan’s export potential has undergone strenuous pressures to perform according to the past performance. There was a need to reveal new export potential and lucrative sectors of economy with recommended policy changes so that new paradigm change in international trade can be initiated. This empirical study carried to meet the objective in which gravity model is used for investigating the bilateral trade between Pakistan and China. This model is being used extensively by the researchers worldwide to make predictions about volume of international trade to suggest the policy changes in international trade management. The findings confirm that the tariff rates significantly and negatively affects the Export Volume from Pakistan to China as t-stats > 1.5 which results the trade deficit to be increased, while the affinity (i.e. bilateral visits of people of Pakistan and China to each other countries, bilateral dialogues between China and Pakistan, Social integrations programs between China and Pakistan etc.) between China and Pakistan and Geography (i.e. the trading countries are both in Asia with the connected borders) significantly and positively affects the Export Volume from Pakistan to China as t-stats > 1.5, thus the trade deficit is reduced due to stated affinity and geography. The large value of F-stats also reports that the relationships of export volume from Pakistan to China with all outlined stated explanatory variables/ predictors (i.e. the gravity model for bilateral trade between Pakistan and China) will remain alive for longer period of time in future.

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Sinaga, Aldon MHP, Masyhuri, Dwidjono Hadi Darwanto, and Sri Widodo. "Employing Gravity Model to Measure International Trade Potential." IOP Conference Series: Materials Science and Engineering 546 (June 26, 2019): 052072. http://dx.doi.org/10.1088/1757-899x/546/5/052072.

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Abbas, Shujaat, and Abdul Waheed. "Pakistan’s Global Trade Potential: A Gravity Model Approach." Global Business Review 20, no. 6 (July 31, 2019): 1361–71. http://dx.doi.org/10.1177/0972150919848936.

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The international trade of Pakistan is highly concentrated on a few goods and markets. This study investigates macroeconomic behaviour of trade flow and explores potential trade markets for Pakistan using an augmented gravity model on a large panel of 47 cross-sections from 1980 to 2013. The result of standard gravity variables shows consistent findings with statistically significant t-statistics, whereas augmented variables reveal that relative price has a positive impact with lower price elasticity. The result of binary variables shows that Pakistan’s trade is more with countries having the same language, whereas lower trade is observed with bordering countries. The result of South Asian Free Trade Agreement (SAFTA) revealed ineffectiveness of regional integration on the creation of trade for Pakistan, whereas, bilateral free trade agreements (BFTAs) have created considerable trade. The finding of trade potential revealed exhausted potential with major trading partners and there is a need for greater trade diversification from exhausted to potential countries. It has higher untapped potential with Nepal, Iraq, India, Philippines and Jordan, respectively, in Asia, whereas European countries have the highest potential. The results concluded that Pakistan can diversify its trade from exhausted to potential countries through individual BFTAs and multilateral free trade agreements. South Asian countries should address their disputes and revisit SAFTA aiming to improve regional trade and growth.

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WARD, MICHAEL D., JOHN S. AHLQUIST, and ARTURAS ROZENAS. "Gravity's Rainbow: A dynamic latent space model for the world trade network." Network Science 1, no. 1 (April 2013): 95–118. http://dx.doi.org/10.1017/nws.2013.1.

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AbstractThe gravity model, long the empirical workhorse for modeling international trade, ignores network dependencies in bilateral trade data, instead assuming that dyadic trade is independent, conditional on a hierarchy of covariates over country, time, and dyad. We argue that there are theoretical as well as empirical reasons to expect network dependencies in international trade. Consequently, standard gravity models are empirically inadequate. We combine a gravity model specification with “latent space” networks to develop a dynamic mixture model for real-valued directed graphs. The model simultaneously incorporates network dependencies in both trade incidence and trade volumes. We estimate this model using bilateral trade data from 1990 to 2008. The model substantially outperforms standard accounts in terms of both in- and out-of-sample predictive heuristics. We illustrate the model's usefulness by tracking trading propensities between the USA and China.

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Host, Alen, Helga Pavlić Skender, and Petra Adelajda Zaninović. "Trade Logistics – the Gravity Model Approach." Zbornik radova Ekonomskog fakulteta u Rijeci: časopis za ekonomsku teoriju i praksu/Proceedings of Rijeka Faculty of Economics: Journal of Economics and Business 37, no. 1 (June 28, 2019): 327–42. http://dx.doi.org/10.18045/zbefri.2019.1.327.

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Šimáková, Jana, and Daniel Stavárek. "An Empirical Sector-Specific Gravity Model for Hungarian International Trade." Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis 63, no. 6 (2015): 2145–50. http://dx.doi.org/10.11118/actaun201563062145.

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This paper contributes to the economic literature on the impact of exchange rate volatility on Hungary’s foreign trade. Basic gravity model shows that trade volume between a pair of countries is an increasing function of their sizes (GDP) and a decreasing function of the distance between them. Additional factors included in extended model are population, dummy for common border and proxy for exchange rate volatility. The measure of exchange rate volatility is estimated by GARCH model. This paper explores relationship between trade and exchange rate uncertainty using quarterly data over the period 1999:1 – 2014:3. In order to obtain the objective result, we use the panel data regression for 10 sectors of Hungarian international trade based on SITC classification and six major trading partners (Austria, Germany, France, United Kingdom, Italy and Poland). The significant parameters obtained from panel regression demonstrate that bilateral exchange rate volatility leads to a decrease in Hungary’s foreign trade.

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Bubáková, Petra. "Gravity Model of International Trade, Its Variables, Assumptions, Problems and Applications." Acta Oeconomica Pragensia 21, no. 2 (April 1, 2013): 3–24. http://dx.doi.org/10.18267/j.aop.396.

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Tamaş, Anca. "Why should the gravity model be taught in business education?" Proceedings of the International Conference on Business Excellence 14, no. 1 (July 1, 2020): 422–33. http://dx.doi.org/10.2478/picbe-2020-0040.

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AbstractThe aim of this paper is to critically analyze the papers from the literature mainstream regarding the gravity model and to identify the main findings. The paper highlights the importance of studying the gravity model in the tertiary business education. Introduced by Tinbergen (1962), the gravity model was widely used to analyze the international trade flows in theoretical, as well as empirical studies. Alongside the classical determinants, economy size, market size and geographical distance, other variables which influence the trade flows were found: trade agreements, foreign direct investments, exchange rate, trade taxes, cultural distance, migration, remoteness, knowledge capital, technological development. There are many controversies regarding the zeroes problem within the model, as well as many controversies on the solutions of the zeroes problem. A meta-analysis and systematic review of the relevant literature in the last 56 years was conducted. From author’s knowledge, this study is the most extended literature review on the gravity model, covering more than 50 years of research. Despite all the theoretical controversies, the gravity model proved to be a robust one, with a great power of explanation in more than 80% of the dynamics and structure of the trade flows. Therefore, the gravity model should be considered a valuable analysis tool in teaching and studying in tertiary business education: international trade, econometrics, statistics, trade policy and so on.

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Chaney, Thomas. "Distorted Gravity: The Intensive and Extensive Margins of International Trade." American Economic Review 98, no. 4 (August 1, 2008): 1707–21. http://dx.doi.org/10.1257/aer.98.4.1707.

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By considering a model with identical firms, Krugman (1980) predicts that a higher elasticity of substitution between goods magnifies the impact of trade barriers on trade flows. In this paper, I introduce firm heterogeneity in a simple model of international trade. I prove that the extensive margin and the intensive margin are affected by the elasticity of substitution in exact opposite directions. When the distribution of productivity across firms is Pareto, the predictions of the Krugman model with representative firms are overturned: the impact of trade barriers on trade flows is dampened by the elasticity of substitution, and not magnified. (JEL F12, F13)

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Pomichowski, Piotr, and Maria Parlińska. "ANALYSIS OF POLISH INTERNATIONAL TRADE WITH NEIGHBORING COUNTRIES, USING GRAVITY MODEL." Annals of the Polish Association of Agricultural and Agribusiness Economists XX, no. 5 (October 18, 2018): 173–78. http://dx.doi.org/10.5604/01.3001.0012.6704.

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The aim of the study was to examine whether there are non-tariff barriers (NTB s) in Poland’s trade with neighboring countries and in what amounts. For this purpose, a gravitational model of international trade was used, in which the parameters of selected variables were estimated in 4 agri-food sectors: agricultural raw materials, dairy products, food, fruit and vegetables, and meat products. The estimation of NTB s was the smallest in all sectors mentioned in Poland’s exports to Slovakia. The largest restrictions except for the dairy sector occur in Poland’s trade with Ukraine. The largest non-tariff barriers in Poland’s trade with neighbors occur in the agricultural raw materials sector, and the smallest in meat products. In addition, the model confirmed the veracity of the Linder hypothesis.

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Šimáková, Jana, and Daniel Stavárek. "An Empirical Sector-Specific Gravity Model for Hungarian International Trade." Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis 63, no. 6 (2015): 2145–50. http://dx.doi.org/10.11118/201563062145.

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Krisztin, Tamás, and Manfred M. Fischer. "The Gravity Model for International Trade: Specification and Estimation Issues." Spatial Economic Analysis 10, no. 4 (September 2015): 451–70. http://dx.doi.org/10.1080/17421772.2015.1076575.

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Cieślik, Andrzej, Jan Jakub Michałek, and Jerzy Mycielski. "Social Development and International Trade in Central Europe." Equilibrium 7, no. 2 (June 30, 2012): 7–19. http://dx.doi.org/10.12775/equil.2012.008.

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In this paper we study the impact of social development on international trade in Central and Eastern Europe using the generalized gravity model. Many previous empirical studies which explored the determinants of trade flows, concentrated only on traditional gravity variables, such as the size of trading partners, factor abundance, technology differences or distance. In our study, in addition to the standard set of gravity variables, we examine the role of aggregate social development indicators such as Human Development Index and its components. Our results show that both aggregate and disaggregate measures of social development affect the volume of international trade flows. In particular, the education indexes seem to be positively related to bilateral trade flows.

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Thompson, Jada M., Dustin L. Pendell, Amy D. Hagerman, and Kamina K. Johnson. "International Trade Implications of Highly Pathogenic Poultry Disease Events." Agricultural and Resource Economics Review 49, no. 3 (November 8, 2019): 517–37. http://dx.doi.org/10.1017/age.2019.24.

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Animal disease events can lead to international trade restrictions which can vary in duration, products included, and geographical extent. Accounting for multilateral resistance between trading partners, a general gravity model of trade is estimated with a Hausman-Taylor and a Hausman-Taylor seemingly unrelated estimator to evaluate the trade quantity impact by commodity resulting from highly pathogenic poultry disease events in 24 exporting markets. Commodity specific results show that quantity traded and products demanded during a disease event differ by commodities. Understanding these impacts can better prepare exporters for potential changes in trade quantity given a disease event.

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Waugh, Michael E. "International Trade and Income Differences." American Economic Review 100, no. 5 (December 1, 2010): 2093–124. http://dx.doi.org/10.1257/aer.100.5.2093.

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I develop a novel view of the trade frictions between rich and poor countries by arguing that to reconcile bilateral trade volumes and price data within a standard gravity model, the trade frictions between rich and poor countries must be systematically asymmetric, with poor countries facing higher costs to export relative to rich countries. I provide a method to model these asymmetries and demonstrate the merits of my approach relative to alternatives in the trade literature. I then argue that these trade frictions are quantitatively important to understanding the large differences in standards of living and total factor productivity across countries. (JEL F11, F13, F14, O19)

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Keller, Wolfgang, and Stephen Ross Yeaple. "The Gravity of Knowledge." American Economic Review 103, no. 4 (June 1, 2013): 1414–44. http://dx.doi.org/10.1257/aer.103.4.1414.

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We analyze the international operations of multinational firms to measure the spatial barriers to transferring knowledge. We model firms that can transfer bits of knowledge to their foreign affiliates in either embodied (traded intermediates) or disembodied form (direct communication). The model shows how knowledge transfer costs can be inferred from multinationals' operations. We use firm-level data on the trade and sales of US multinationals to confirm the model's predictions. Disembodied knowledge transfer costs not only make the standard multinational firm model consistent with the fact that affiliate sales fall in distance but quantitatively accounts for much of the gravity in multinational activity. (JEL F12, F14, F23, L25, O33)

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Wu, Zongning, Hongbo Cai, Ruining Zhao, Ying Fan, Zengru Di, and Jiang Zhang. "A Topological Analysis of Trade Distance: Evidence from the Gravity Model and Complex Flow Networks." Sustainability 12, no. 9 (April 25, 2020): 3511. http://dx.doi.org/10.3390/su12093511.

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As a classical trade model, the gravity model plays an important role in the trade policy-making process. However, the effect of physical distance fails to capture the effects of globalization and even ignores the multilateral resistance of trade. Here, we propose a general model describing the effective distance of trade according to multilateral trade paths information and the structure of the trade flow network. Quantifying effective trade distance aims to identify the hidden resistance information from trade networks data, and then describe trade barriers. The results show that flow distance, hybrid by multi-path constraint, and international trade network contribute to the forecasting of trade flows. Meanwhile, we also analyze the role of flow distance in international trade from two perspectives of network science and econometric model. At the econometric model level, flow distance can collapse to the predicting results of geographic distance in the proper time lagging variable, which can also reflect that flow distance contains geographical factors. At the international trade network level, community structure detection by flow distances and flow space embedding instructed that the formation of international trade networks is the tradeoff of international specialization in the trade value chain and geographical aggregation. The methodology and results can be generalized to the study of all kinds of product trade systems.

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Bothma, Cornelius, and Michael Colin Cant. "The effectiveness of trade map as tool for measuring the trade potential between South Africa and China." Corporate Ownership and Control 8, no. 1 (2010): 463–73. http://dx.doi.org/10.22495/cocv8i1c4p5.

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Measuring the trade potential between two countries is an important task both for the national trade analyst as well as for the company researcher. Trade potential is commonly measured using the gravity model, an economic construct. The gravity model, however, is not a perfect model and has its detractors. More recently, the International Trade Centre developed Trade Map an online tool for analysing the trade flows between countries. Although not yet widely used, Trade Map appears to be to good alternative or complementary facility that can be used to measure trade potential. The purpose of this article is to report on the evaluation of Trade Map as a tool for measuring trade potential. In so doing, Trade Map was used to analyse the trade potential between South Africa and China. It was found that Trade Map can provide the international trade researcher with a rich width and depth of information on the trade potential between two countries. It is suggest that Trade Map should be used together with the gravity model to create a more complete analysis of trade potential

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Mehmood, Bilal, Azka Arif Malik, and Rabia Khalid. "ICT Augmented Gravity Model Application: Sector Level Analysis of the Asia-Pacific Region." Revista Digital Mundo Asia Pacífico 10, no. 18 (July 2021): 43–66. http://dx.doi.org/10.17230/map.v10.i18.03.

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The use of information and communication technologies (ICT) in commerce improves the commercial structure and economic capacity of a country. This study empirically assesses the impact of ICTs on international trade in 36 countries in Asia and the Pacific, at the sectoral level, between 2007 and 2018. The study evaluates whether ICTs improve international trade by hiring the gravity model of international trade and increasing it with the ICT variable. An ICT development indicator (IDI) is formed by joining seven different ICT variables that show ICT infrastructure, use, and skills. Using the Poisson pseudo-maximum likelihood (PPML) estimation technique, this study shows that ICTs improve trade by reducing transaction costs. The findings reveal that information and communication technology positively and significantly influence international trade in all sectors of the Asia-Pacific region, and that trade intensifies when both trading partners have a high endowment of information and communications technology. The study recommends that governments in developing countries upgrade their ICT infrastructure levels.

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Ozarnov, Ruslan. "Gravity model of international trade among EAEU, SCO and BRICS countries." Теоретическая и прикладная экономика, no. 4 (April 2020): 14–27. http://dx.doi.org/10.25136/2409-8647.2020.4.33954.

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This article is dedicated to examination of factors influencing the economic and financial cooperation of countries with developing market, namely EAEU, SCO and BRICS, by means of building a gravity model of trade. Special attention is given to affiliation of the countries to former USSR. The established timeframe starts with the crisis for Russia 2014 and continuous until the present. The subject of this research is the economic and financial relations emerged in the process of cooperation of EAEU, SCO and BRICS member-states with developing market. The author examines the factors affecting economic and financial cooperation of these countries, such as the size of external trade, gross domestic product per capita, trade openness index, currency appreciation rate of importing and exporting countries, distance between the countries, affiliation of the country with developing market to EAEU, SCO and BRICS. Using econometric methods, the author determines the factors impacting the cooperation of countries with developing markets within the three blocks – EAEU, SCO and BRICS based on the gravity model of international trade. This defines the scientific novelty of this work. The peculiarity of this model consists in availability of lag exchange rates. Inclusion of lag in reference to the currency rate of the exporter led to exclusion of 2014 data from sampling. The acquired results should be taken into account Russia’s cooperation on bilateral and multilateral basis within the framework of EAEU, SCO and BRICS.

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Cantore, Nicola, and Charles Fang Chin Cheng. "International trade of environmental goods in gravity models." Journal of Environmental Management 223 (October 2018): 1047–60. http://dx.doi.org/10.1016/j.jenvman.2018.05.036.

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Santana-Gallego, María, Francisco J. Ledesma-Rodríguez, and Jorge V. Pérez-Rodríguez. "International trade and tourism flows: An extension of the gravity model." Economic Modelling 52 (January 2016): 1026–33. http://dx.doi.org/10.1016/j.econmod.2015.10.043.

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Golovko, Anna, and Hasan Sahin. "Analysis of international trade integration of Eurasian countries: gravity model approach." Eurasian Economic Review 11, no. 3 (March 13, 2021): 519–48. http://dx.doi.org/10.1007/s40822-021-00168-3.

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BIKKER, JACOB A. "An International Trade Flow Model with Substitution: An Extension of the Gravity Model." Kyklos 40, no. 3 (May 5, 2007): 315–37. http://dx.doi.org/10.1111/j.1467-6435.1987.tb00683.x.

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Popovych, Andriy. "Zastosowanie modelu grawitacyjnego do analizy międzynarodowego handlu miodem pszczelim." Zeszyty Naukowe SGGW w Warszawie - Problemy Rolnictwa Światowego 18(33), no. 4 (December 28, 2018): 395–406. http://dx.doi.org/10.22630/prs.2018.18.4.128.

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The aim of the article is to analyze the characteristics of functioning and to identify trends in the development of the global honey market. To analyze the factors affecting global trade in honey, the gravity model was used, namely its variation for a single product. Statistics on international trade from databases of leading international organizations were used to quantify this model. As a result of econometric analysis of panel data, the determinants of global trade in honey were identified and the use of the gravity model was justified in assessing this market.

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Gouveia, Sofia, João Rebelo, and Lina Lourenço-Gomes. "Port wine exports: a gravity model approach." International Journal of Wine Business Research 30, no. 2 (June 18, 2018): 218–42. http://dx.doi.org/10.1108/ijwbr-02-2017-0008.

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Purpose The purpose of this paper is to empirically examine the macroeconomic determinants of Port wine exports, taking into account the diversity and various quality levels associated with this product. Design/methodology/approach Port wine is a fortified wine only produced in Portugal. In the period 2006-2014, an extended gravity model is applied to data on the exports of the top 20 importing countries, accounting for 94 per cent of total exports. The authors base their empirical strategy on the Hausman–Taylor estimator (1971), overcoming endogeneity and accounting for time invariant variables. They estimate the impact of several factors on the total trade of Port wine, namely: gross domestic product (GDP), GDP per capita, tariffs, exchange rates, distance from original supplier, mutual language familiarity, landlockedness, wine consumption per capita and presence of Portuguese emigrants, all measured in volume and value terms, and for each of the four categories (Standard, High Standard, Vintage and Aged). Findings The findings show that the quantity and value of total Port wine exports are positively determined by overall GDP per capita, the presence of a Portuguese emigrant community (which implies that to some degree a common language and culture are shared), while exports are negatively influenced by landlockedness. In contrast to the traditional gravity model, distance from the source of supply does not appear to be a significant determinant, a fact explained by the specific and singular nature of Port wine and by the long tradition of this product in international markets. In addition, the results revealed specific determinants for specific product categories – such as GDP for aged Port and wine consumption per capita for high standard, vintage and aged Port, suggesting that Portugal needs to increase its exports of high-quality Port wine to markets that exhibit a tendency towards increased wine consumption per capita and are coming to be considered large and fast-growing economies. Originality/value This paper extends the literature, by respecifying the typical gravity model for aggregate goods to permit the analysis of wine exports. There has been relatively little application of this model to assess the determinants of the wine trade, and when it has been used, generally it has been in studies focusing on aggregate wine trade between countries. This paper seeks to fill this gap by focusing on the determinants of exports of a specific wine – Port wine, which is an internationally recognised product, with a clear internal product differentiation according to distinct quality levels – and in this regard provides new insights into the international patterns of trade in wine.

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Ismail Metin and Gencay Tepe. "Gravity Model: A Bibliometric Analysis and Detailed Overview." International Journal of Business and Society 22, no. 1 (March 24, 2021): 365–81. http://dx.doi.org/10.33736/ijbs.3183.2021.

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Originating from Newton’s gravitational theory which was posed in 1687; the concept of gravity equation was primarily used by Tinbergen in the field of international trade analysis in 1962. After Tinbergen, Pöyhönen, Linnemann, Anderson, Santos and Tenreyro, Bergstrand and Egger, Deardorff and also Wooldridge developed the theory of gravity. And gravity model has become progressively well-liked in the academic publications. The aim of this study is to determine the literature belonging to the years between 1980 which is the starting point for “gravity” related studies’ being published on Web of Science (WoS) and Scopus and 2020 to execute a bibliometric review of this literature. Thereby, it targets to supply a perspective concerning the nature of the studies executed on the subject of gravity model, so as to point out the lack of the bibliometric analysis-using studies on the field of international trade. In this study, we collected the data between 1980-2020 from Scopus and Web of Science database and analysed using the Gephi, Vosviewer and R Studio programmes in order to be used in our bibliometric analysis. The results showed that U.S.A., Germany and China are the countries which have the highest number of publications in this field, and the journals with the highest number of publications are “World Economy”, “Journal of International Economics” and “Review of International Economics”. The fact that three programmes have been simultaneously used in the study is demonstrative of the originality of the paper.

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Finco, Adele, Monica Padella, Guido Di Pronio, and Mirco Pollonara. "Dinamiche del commercio internazionale dell'olio di oliva italiano: un'analisi prospettica." ECONOMIA AGRO-ALIMENTARE, no. 2 (October 2009): 169–85. http://dx.doi.org/10.3280/ecag2009-002009.

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- The paper analyses the dynamics of the Italian olive oil trade and gives a preliminary explanation of the opportunity in the international market. The paper starts showing the description of olive oil chain and production and underlining the main factors affecting the import export system. The aim of this work is to explain the magnitude of the trade flows for olive oil from Italy 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". This model has been broadly applied to the analysis of international trade because it provides robust estimates. The results obtained and the model itself are useful in forecasting potential trends in the exportation of high quality Italian olive oil.JEL Codes: Q13, Q17, C20Key words: Italian Olive Oil, Food-Trade, Gravity Models, Export Analysis

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Gil-Pareja, Salvador, Rafael Llorca-Vivero, and José Antonio Martínez-Serrano. "Corruption and international trade: a comprehensive analysis with gravity." Applied Economic Analysis 27, no. 79 (September 2, 2019): 3–20. http://dx.doi.org/10.1108/aea-06-2019-0003.

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Purpose The purpose of this paper is to analyze the impact of corruption on trade. Design/methodology/approach The authors estimate gravity equations with the last econometric advances on a wide sample of countries and years using three different measures of corruption. Two of them belong to the so-called perception-based indexes and the third is derived from a structural model that takes into account the causes and indicators of corruption across countries. Findings A negative effect of corruption on trade appears with perceptions, but it is not widespread. However, the authors find sensible evidence of the “grease the wheels” view with the structural index if low and middle income countries are implicated. Additionally, when using this measure, differences in corruption levels negatively impact trade. Both results are in line with expectations. Originality/value Moreover, membership in regional trade agreements does not seem to significantly alter these results.

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Khan Achakzai, Jahangir. "Unilateral Liberalization versus Regional Integration: The Case of ECO Member Countries." LAHORE JOURNAL OF ECONOMICS 15, no. 1 (January 1, 2010): 27–44. http://dx.doi.org/10.35536/lje.2010.v15.i1.a2.

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Using an international dataset on bilateral trade for 137 countries in 2005, we estimate a gravity model to address the question of whether intra-Economic Cooperation Organization (ECO) trade is too low and whether the scale of trade at present is accounted for by regional integration or unilateral liberalization. The results of the gravity model confirm that intra-regional trade is lower than predicted by the gravity equation. The results also validates the theory that the present level of trade is attributed to regional agreements rather than unilateral liberalization, suggesting greater scope for regional cooperation among ECO member countries.

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Greaney, Theresa M., and Kozo Kiyota. "The gravity model and trade in intermediate inputs." World Economy 43, no. 8 (March 25, 2020): 2034–49. http://dx.doi.org/10.1111/twec.12947.

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Abakumova, Juliet, and Olena Primierova. "Globalization and export flows between Eurasian Economic Union countries: a gravity model approach." SHS Web of Conferences 74 (2020): 06001. http://dx.doi.org/10.1051/shsconf/20207406001.

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In the empirical tools for the research of trade integration a special place is occupied by gravity models, insofar as these models have rather high accuracy in explaining mutual trade flows. Recently, however, the gravity model approach has been subjected to critical rethinking: globalization brought considerable changes not only in economic growth, but also in international trade, what allowed speaking about a “Death of Distance”. At the same time, estimates based on gravity models almost always demonstrated an increase in the coefficient of distance as a proxy for transport costs, which contradicts the general perception of the phenomenon of globalization. The paper is devoted to testing the validity of inclusion of the globalization index in the model, which would allow consider the role of globalization in bilateral cross-country trade, as well as testing the hypothesis of reducing the coefficient of distance. Based on the annual panel data over the period 2000-2016 the trade integration model for the EEU countries was estimated. To test the hypothesis of a decrease in the estimated coefficient of distance over time, the gravity model was also evaluated at different time intervals. And the positive impact of the globalization factor on the volume of exports is revealed.

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Gallo, Mariano, Vittorio Marzano, and Fulvio Simonelli. "Empirical Comparison of Parametric and Nonparametric Trade Gravity Models." Transportation Research Record: Journal of the Transportation Research Board 2269, no. 1 (January 2012): 29–41. http://dx.doi.org/10.3141/2269-04.

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A systematic comparison is made of parametric (i.e., ordinary least-squares regressions and related generalizations) and nonparametric (i.e., kernel regressions and regression trees) log-linear gravity models for reproducing international trade. Experiments were conducted to estimate a log-linear gravity model reproducing import and export trade flows in quantity between Italy and 13 world economic zones, based on a panel estimation data set. The best parametric regression model was estimated to define a baseline reference model. Some specifications of nonparametric models, belonging to the categories of kernel regressions and regression trees, were also estimated. The performance of parametric and nonparametric models is contrasted through a comparison of goodness-of-fit measures (R2, mean absolute percentage error) both in estimation and in hold-out sample validation. To assess the differences in model elasticity and forecasts, both parametric and nonparametric models are applied to future scenarios and the corresponding results compared.

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Melnyk, Tetyana, Nataliya Kalyuzhna, and Kateryna Pugachevska. "A GRAVITY MODEL OF TRADE TURNOVER BETWEEN UKRAINE AND THE EU." Baltic Journal of Economic Studies 4, no. 4 (September 2018): 217–22. http://dx.doi.org/10.30525/2256-0742/2018-4-4-217-222.

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Determining the conditions for further liberalization and the reality of long-term and effective trade and economic cooperation of Ukraine with the EU countries requires assessing the strength and probability of the influence of institutional factors. The possibility of taking into account the significance of institutional factors in the development of foreign trade relations creates a gravity modelling. Determination of gravitational principles of foreign trade actualizes the problem of developing the gravity model, which takes into account impact of institutional factors, contains the necessary and sufficient number of factors, and may be tested for adequacy based on statistical data. The purpose of the paper is to construct the gravity model taking into account the institutional conditions of trade and its empirical verification on the example of trade turnover between Ukraine and the EU. Methodology. Methods of statistical analysis and econometric modelling were used for constructing the gravity model, estimating its statistical significance and predictive ability. In the article, the necessity of taking into account the influence of institutional factors on the formation of the competitive status of the country in the sphere of international trade is substantiated. It is proved that, in conditions of increasing the contradictory nature of trade relations, the role of institutional gravity factors in foreign trade between states increases. The result of the article is the gravity model with such explanatory factors, as the gross domestic product of trade partners in purchasing power parity and the complex characteristic of “trade distance” between countries as an indicator of the influence of institutional factors on foreign trade relations. As a conclusion, it may be noted that the model is statistically significant, adequately describes the input data. The proposed model takes into account the presence of institutional factors of foreign trade, whose influence on the interstate trade and economic cooperation conditions is constantly increasing. Value/originality. The proposed results can be used for modelling and forecasting of foreign trade between trading partners, taking into account the impact of specific institutional factors on their foreign trade relations.

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Natale, Fabrizio, Alessandra Borrello, and Arina Motova. "Analysis of the determinants of international seafood trade using a gravity model." Marine Policy 60 (October 2015): 98–106. http://dx.doi.org/10.1016/j.marpol.2015.05.016.

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Charandabi, Sina E., Farnaz Ghashami, and Kamyar Kamyar. "US-China Tariff War: A Gravity Approach." Business and Economic Research 11, no. 3 (August 2, 2021): 69. http://dx.doi.org/10.5296/ber.v11i3.18757.

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Trade wars occur as a consequence of countries imposing tariffs and/or other trade barriers on one another. Such phenomenon is often a result of nationalism, unilateralism, and protectionism, and intensifies due to retaliation by different sides of the war. We use recent multinational trade data to measure the effects of single- and multi-sided tariffs on international trade. The methodology used in the paper is the structural Gravity model first introduced by Anderson and van Wincoop (2003). Theoretical implications and references of gravity equations are also presented throughout the article.

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Balogh, Jeremiás Máté. "Investigating the effect of geographical distances and cultural proximity on the Hungarian wine trade." Society and Economy 37, no. 4 (December 2015): 513–29. http://dx.doi.org/10.1556/204.2015.37.4.6.

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Wine is a very special product from an economic, cultural, and sociological point of view. Wine culture and wine trade play an important role in Hungary. The effect of cultural and geographical proximity on international trade has already been proven in the international trade literature. The size of bilateral trade flows between any two countries can be approximated by the gravity theory of trade. The gravity model provides empirical evidence of the relationship between the size of the economies, the distances between them, and their trade. This paper seeks to analyse the effect of cultural and geographical proximity on Hungary’s bilateral wine trade between 2000 and 2012, employing the gravity equation. The analysis is based on data from the World Bank WITS, WDI, as well as CEPII, and WTO databases. I apply OLS, Random Effects, Poisson, Pseudo-Poisson-Maximum-Likelihood and Heckman two stage estimators to calculate the gravity regression. The results show that in the case of Hungary, cultural similarity and trade liberalisation have a positive impact, while geographical distance, landlockedness, and contiguity have a negative impact on Hungarian wine exports.

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Keita, Moussa. "Does ICT Development Flatten the Globe? Evidence from International Trade Costs Data." American Journal of Trade and Policy 3, no. 2 (August 31, 2016): 39–46. http://dx.doi.org/10.18034/ajtp.v3i2.399.

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This study attempts to bring new perspectives on the death of distance hypothesis by examining to what extent the intensification of ICT has contributed to attenuate the effect of distance on international trade issues. Our analysis is based on an extended gravity model constituted of 2827 country pairs observed from 2002 to 2012. The model is estimated by using the Hausman-Taylor instrumental variable approach to deal with specificities of the panel gravity models that cannot be treated in classical fixed-effect or random-effect models. The estimations confirm significant beneficial effects of ICT regarding trade costs reduction. We found that bilateral trade costs are significantly low between countries that have a more densified communication network. And this effect appears to be strongly heterogeneous regarding the distance. In particular, we found that the impact of ICT on trade costs is greater when the distance between the trading partners is more important. We also found that the elasticity of trade costs to distance decreases as the level of ICT increases. These results appear robust to various sensitivity and robustness checks and are consistent with other studies. Finally, the results obtained in this study suggest the existence of strong distance-neutralizing effect of ICT. JEL Classifications Code: F14 ; O33

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VIGANI, MAURO, VALENTINA RAIMONDI, and ALESSANDRO OLPER. "International trade and endogenous standards: the case of GMO regulations." World Trade Review 11, no. 3 (July 2012): 415–37. http://dx.doi.org/10.1017/s1474745612000262.

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AbstractThis paper quantifies the effect of GMO regulation on bilateral trade flows of agricultural products. We develop a composite index of GMO regulations and using a gravity model we show that bilateral differences in GMO regulation negatively affect trade flows. This effect is especially driven by labeling, approval process, and traceability. Our results are robust to the endogeneity of GMO standards to trade flows.

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THOMPSON, JADA M. "EFFECTS OF REGIONALIZED TRADE RESTRICTIONS ON QUANTITY EXPORTED DURING A HIGHLY PATHOGENIC AVIAN INFLUENZA EVENT." Journal of Agricultural and Applied Economics 50, no. 2 (April 2, 2018): 270–89. http://dx.doi.org/10.1017/aae.2017.29.

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AbstractFrom December 2014 to June 2015, U.S. poultry was affected by highly pathogenic avian influenza that led to destruction of 48 million birds and losses in international trade. During the event, 45 countries placed trade restrictions on U.S. poultry exports, varying from regionalized to national poultry restrictions. Using a gravity model of trade, the effects on quantity traded is estimated for poultry exports at the aggregated and disaggregated commodity level to understand product flows during an event. Results indicate U.S. poultry exports benefit from countries willing to apply limited trade restrictions, and the trade impact varies across disaggregated commodities.

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Dube, Cornelius. "The Role of Competition Reforms in Unlocking International Trade: Evidence from Africa’s Proposed Tripartite Free Trade Area." Antitrust Bulletin 66, no. 2 (March 9, 2021): 252–75. http://dx.doi.org/10.1177/0003603x21997046.

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This study applies an econometric approach to estimate the impact of competition reform adoption and tightening on international trade, using Africa’s envisaged Tripartite Free Trade Area (TFTA) as a case study. An index measuring the extent to which competition regimes have been tightened and enforced between 2001 and 2016 in the TFTA countries is constructed. A gravity model of international trade, based on generalized method of moments, is then estimated to establish how exports are influenced by this competition index measure after controlling for other traditional gravity model variables. The results show that increasing competition reforms by 1% is associated with an increase in bilateral exports into the TFTA by 0.16%. However, if competition reforms in the importing country increase by 1%, then an approximate decline in bilateral exports of 0.46% would result. This underlines the role of competition enforcement in enhancing national competitiveness.

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Vallina-Hernandez, Ana María, Hanns de la Fuente-Mella, and Rodrigo Fuentes-Solís. "International trade and innovation: delving in Latin American commerce." Academia Revista Latinoamericana de Administración 33, no. 3/4 (August 3, 2020): 535–47. http://dx.doi.org/10.1108/arla-07-2020-0174.

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PurposeThe purpose of this paper is to compare and contrast the international trade characteristics of commerce between Latin American countries and some of the top economies in the world, in order to identify new business opportunities for LATAM firms in dynamical external markets.Design/methodology/approachA triple indexed gravity model, correcting with robust standardized errors clustered, and a panel data analysis was used to obtain the relationship between Latin American countries and advanced and other emerging economies.FindingsThe main finding of this paper is that innovation overcomes gravity effects and parameters typical of a knowledge society are the significant ones to explain trade among different regions. The model that includes an innovation proxy accommodates with the new international theories of trade. Besides, communication capacity is essential to reach consumers abroad with newer and more complex products. Moreover, the constant is significant when innovation is included, which may imply intersectoral trade that behaves relatively stable in bilateral trade.Practical implicationsThe findings suggest that the economies that have some relevance in trade, have increasing numbers regarding patents. Thus, the empirical findings relate to the theoretical models which state that comparative advantages may be dynamic due to technological innovation.Originality/valueThis paper shows that innovation is a central parameter to engage in intratrade and develop a knowledge-based economy. Latin America sometimes appears to be a puzzle as to how to improve its economic performance and overcome its social and economic problems. Intratrade seems to be the route to increase Latin American business participation in world trade.

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Pujiati, Riska, Muhammad Firdaus, Andriyono Kilat Adhi, and Bernhard Brummer. "THE IMPACT OF REGIONAL TRADE AGREEMENTS TO THE COMMODITY TRADE FLOWS (CASE STUDY: INTERNATIONAL PALM OIL TRADE)." Forum Agribisnis 4, no. 2 (September 1, 2014): 193–206. http://dx.doi.org/10.29244/fagb.4.2.193-206.

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Indonesia and Malaysia are the major exporters of palm oil in South East Asia. South East Asia Regional Trade Agreement can affect worldwide trade flow of palm oil. The objective of this study is to examine the effect of the Regional Trade Agreement on the trade flows of Indonesian and Malaysian palm oil. The effect is analyzed with gravity model. The result shows positive dynamic effect of Free Trade Agreement to palm oil trade flow. Regional Trade Agreement has higher impact to Malaysia than Indonesia due to dissimilar government policies.

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Chen, Jiaojiao, Lanhui Wang, Lingchao Li, Juliana Magalhães, Weiming Song, Wenming Lu, Lichun Xiong, Wei-Yew Chang, and Yujun Sun. "Effect of Forest Certification on International Trade in Forest Products." Forests 11, no. 12 (November 28, 2020): 1270. http://dx.doi.org/10.3390/f11121270.

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Forest certification plays an important role in the global trade of legal, sustainably harvested timber. There is no accurate definition of how international forest certification systems impact international trade from a global perspective. This paper is intended to evaluate the influence of forest certification on international trade, so that it can provide a scientific basis for the improvement of the international forest certification systems and for the development of relevant forestry industries in different countries. First, the influence of forest certification on international trade of forest products is explained in the economic model; hence, four hypotheses are put forward. Second, to test these hypotheses, we verify the panel data of bilateral trade and forest certification of all forest products among 67 economies from 2009 to 2018 by incorporating forest certifications into the gravity model. Finally, tests by country groups and product groups were further analyzed, respectively. The results show that: (1) The extended Poisson pseudo maximum likelihood (PPML) estimation solves the problem of the heteroscedasticity and zero trade value problems of the gravity model well in the forest industry. (2) Forest certification has an export competitive effect, a trade barrier effect, as well as common language effect. (3) Forest certification has asymmetric trade effects. The export competitive effect of forest certification in developing countries is greater than that in developed countries. Forest certification has become a trade barrier for developing countries, especially in the process of trade with developed countries. The common language effect is higher during the trade between developed and developing countries. The export competitive effect of wood products is higher than that of furniture products. Forest certification has trade barrier effect on wood products in developing countries, while it has trade barrier effect on furniture products in developed countries.

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Jošić, Hrvoje, and Matej Metelko. "Testing the validity of the Linder hypothesis for Croatia." Croatian Review of Economic, Business and Social Statistics 4, no. 1 (June 1, 2018): 62–73. http://dx.doi.org/10.2478/crebss-2018-0006.

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Abstract This paper presents empirical evidence on the validity of the Linder hypothesis in the case of Croatia. According to the Linder hypothesis, one of the new theories of international trade, countries with a similar level of income per capita should trade more. In order to investigate the trade pattern of Croatia's international trade, a panel regression model is formulated including 184 Croatia's import partner countries in the period from 2000 to 2016. The Linder effect was displayed and calculated using the Linder variable expressed as an absolute difference between GDP per capita of the importing and the exporting country. The cross-country panel regression model is estimated using Pooled OLS, Fixed and Random effects models. Results of the analysis have shown that the validity of the Linder hypothesis for Croatia cannot be accepted. Instead, the structure of Croatia's trade is in line with the gravity model of international trade.

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Čipkutė, Eivilė. "THE GRAVITY MODEL FOR ASSESSING TRADE PATTERNS: THE CASE OF BALTIC STATES." Ekonomika 95, no. 3 (January 11, 2017): 81–97. http://dx.doi.org/10.15388/ekon.2016.3.10330.

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International trade is the key element of globalisation and closer economic and political cooperation between countries. Regional integration is an important driver of closer trade ties among countries. In this context, the article focuses on analysing the factors, influencing the dynamics of trade patterns of the Baltic States. The research method used in the article is the gravity model of trade, which rests on the key assumption that trade between countries is defined by the size of the economies and the distance between the countries. The gravity equation estimates showed that the membership of the Baltic States in the EU had a positive effect on the export levels of the Baltic States to other EU members. On the other hand, the membership in the EU is not the main trade stimulating factor. The more important factor for the Baltic States’ exports is the former economic ties with Russia. An analysis also revealed that the Baltic States have many important trade partners with different levels of income. This finding does not support the Linder hypothesis which states that the main trading partners should have a rather similar level of income.

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Journal articles on the topic 'Gravity model of international trade'

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