Gravity models: a reformulation and an application to discriminatory trade arrangements

Oguledo, Victor I.; MacPhee, Craig R.

doi:10.1080/00036849400000066

Cited by 245 publications

(142 citation statements)

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“…This will transform into economies of scale and other opportunities, as well as the desire to involve a variety of products. Our findings are mixed, and this is in line with previous empirical findings, including those of: Oguledo and MacPhee (1994), Linnemann (1966), andBlomqvist (1994). Matyas et al (1997) established that trading populations of nations affected trade flow negatively and remain significant, while Brad and Mendez (1983) revealed in their findings that population size is positively significant.…”

Section: Interpretation Of Resultssupporting

confidence: 54%

The Gravity Model Approach: An Application on the Eco Was Trading Bloc

Luqman

Bakar

Izraf

2016

South East European Journal of Economics and Business

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This study aims to examine bilateral trade flows across ECOWAS-15 nations with the use of a panel and cross section for the period of 1981-2013. The methodology carried out to achieve this objective involves the use of various techniques of estimation for the gravity model (Static and dynamic). More specifically, this study aims to investigate the formational impact of regional trade integration agreements on trade flows within a group of countries using the same currencies and ECOWAS at large. The main use of regional variables into gravity models is intended to determine whether RTAs lead to trade creation, or diversion. The results show the presence of a strong relationship among the factors of both RIAs and trade flows.

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Section: Interpretation Of Resultssupporting

confidence: 54%

The Gravity Model Approach: An Application on the Eco Was Trading Bloc

Luqman

Bakar

Izraf

2016

South East European Journal of Economics and Business

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“…Newton's Gravity Law in mechanics states that two bodies attract each other proportionally to the product of each body's mass (in kilograms) divided by the square of the distance between their respective centers of gravity (in meters). The gravity model has been applied to a wide variety of goods and factors of production moving across regional and national boundaries under different circumstances since the early 1940s (Oguledo and Macphee, 1994). …”

Section: Data and Model Specificationmentioning

confidence: 99%

Import Inflows of Bangladesh: the Gravity Model Approach

Alam¹,

Uddin²,

Taufique³

2009

IJEF

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Bangladesh suffers from a chronic deficit in her trade balance. The paper is an attempt to explore the imports of Bangladesh which is one of the most significant factors responsible for unfavorable trade balance of the country. The aim of the study is to intend some initiatives for an attempt to ultimately reshaping the trade balance of Bangladesh with her foreign trade partners. The paper examines the existence of the gravity theory for the imports of Bangladesh with its eight major trading partner countries-India, China, Singapore, Japan, Hong Kong, South Korea, USA and Malaysia. The data set consists of yearly data from 1985 to 2003 in a panel approach. The paper comes across with the findings that the gravity theory is consistent with the imports of Bangladesh. That is, the geographical distance of Bangladesh with its partner countries has significant impacts on its imports. But in near future this may change because of different factors such as profitability, easy trade procedures, product delivery time etc. that influence the imports decision more than does the geographical distance. This paper finds mixed relationship between the GDP and imports of Bangladesh. It also shows that the imports of Bangladesh influence the domestic production very little because Bangladesh mostly imports consumer goods rather than capital goods. Moreover, the population of Bangladesh has significant impacts on imports which in turn implies that Bangladesh is not capable of producing adequate consumer goods to meet the increased demand resulted from high population growth. It also shows that partner countries' GDP has significant positive impacts and partner countries' population has mixed impact on imports of Bangladesh. This paper concludes that it will be an alarming situation for trade balance of Bangladesh if the imports continue to increase in such a pattern that the rate increases five to eight times more in respect of population increases and at the same time the ratio of capital goods in proportion of total imports decreases.

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“…An early such study is Sapir (1981) In another early gravity study, Oguledo and MacPhee (1994) find positive and statistically significant effects for GSP, Mediterranean and Lomé preferences for the year 1976. The Lomé effect is larger than the Mediterranean effect, which in turn exceeds that of the GSP.…”

Section: Review Of Empirical Studiesmentioning

confidence: 99%

“…Again, the estimated gross trade creation is quite sizable, with figures for the Lomé preferences at most exceeding 400%. Sapir (1981), Oguledo and MacPhee (1994) and Nilsson (2002) made important contributions by being able to show that -contrary to the bleak view taken by many commentators regarding the effectiveness of preferences -when controlling for other important factors that may work against developing countries' export prospects, preferences actually have positive effects. On the other hand, the cross-sectional methods used in these papers made it impossible to control for unobserved heterogeneity between countries, and the implied omitted variable bias may be an explanation for the remarkably large effects that were found.…”

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confidence: 99%

From Trade Preferences to Trade Facilitation: Taking Stock of the Issues

Persson

2012

Economics

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The objective of the paper is to explore and give an overview of two central policy alternatives to improve the integration between the European Union and developing countries by removing barriers to trade: trade preferences and trade facilitation. The author reviews the relevant literatures and discusses the issues which constitute problems or opportunities for practitioners and researchers in both areas. She concludes that while at least some trade preferences actually have been less of a failure than their reputation suggests, trade facilitation is a far more promising policy option for the future. IntroductionThe European Union (EU) is the largest trading partner for many of the world's developing countries, but there is nevertheless a large potential to expand that trade. Given that increased trade is widely believed to be one of the keys to alleviating poverty and improving standards of living in developing countries, from a policy perspective it is crucial to understand the options available for economic integration between the EU and developing countries. The objective of this paper is therefore to explore and give an overview of two central policy alternatives to improve the integration between the EU and developing countries by removing barriers to trade: trade preferences and trade facilitation. Nonreciprocal trade preferences for low-and middle-income countries have been used by the European Union since at least the 1960s, and have in a broader sense been at the heart of the North-South trade policy debate for the last half century. By contrast, trade facilitation, i.e. loosely speaking cutting red tape at the border, is a relatively new issue, but one that has quickly risen high on the policy agenda. The paper starts by defining what trade preferences are and what they are meant to achieve, and then puts this policy option into its historical context. Noting that many commentators tend to regard trade preferences as a failed policy -something which interestingly is not necessarily what the reviewed empirical research finds -the paper discusses several dimensions that may be important when determining preferences' trade-creating potential.The paper then moves on to discuss how to define trade facilitation, outline why and how inefficient trade procedures constitute costs for traders and give an overview of what the likely economic effects are of reform in the area. In particular, the empirical literature on trade facilitation is reviewed, including the few papers that explicitly link trade facilitation and European integration. This section also gives examples of concrete measures that governments could take to reduce transaction costs related to inefficient trade procedures, and it closes by considering how to properly measure trade facilitation, and what kind of data researchers would need to better be able to analyze the causal effects.The last section summarizes the historic shift from a focus on trade preferences in trade relations between industrialized and developing countries to a fo...

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Gravity models: a reformulation and an application to discriminatory trade arrangements

Cited by 245 publications

References 20 publications

The Gravity Model Approach: An Application on the Eco Was Trading Bloc

The Gravity Model Approach: An Application on the Eco Was Trading Bloc

Import Inflows of Bangladesh: the Gravity Model Approach

From Trade Preferences to Trade Facilitation: Taking Stock of the Issues

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