The Gravity Model for Trade Theory

Abstract

This article delivers a theoretical overview of the gravity model and some of its main applications. The goal is as well to provide some criticism and to discuss the effectiveness of this widely used model. The model, in fact, not only did not lose its appeal over time but, on the contrary, it continued to develop and to become more reliable and relevant. It becomes clear that, although it has some problems and limitations, the gravity model is still a widely used and compelling tool, especially in the trade flow area. Jelen cikk a gravitációs modellról és annak fő alkalmazásairól nyújt áttekintést. A tanulmány további célja a széleskörben használt modell hatékonyságának megvitatása. A modell nem csak, hogy nem veszített népszerűségéből, hanem megbízhatóbbá és relevánsabbá vált. Világos, hogy a modell korlátai ellenére még mindig széleskörben bevett vizsgálati eszköz, különösen a kereskedelem terén.

Determinants of Latin American and the Caribbean agricultural trade: A gravity model approach

“…In turn, geographical distance is inversely proportional to agricultural trade. In this sense, sharing common geographical borders, as well as having a short geographic distance between trading partners can encourage bilateral agri-food trade (Head and Mayer 2014;Balogh and Leitão 2019;Borges Aguiar and Cossu 2019). H 2 : Cultural similarity between LAC exporters and their trading partners stimulate bilateral agricultural trade flows between them.…”