Search results

The Russian export flow is highly concentrated on few trading partners that results in its high vulnerability to external shock. Furthermore, the Russian–Ukraine conflict and corresponding western sanctions has enhanced the need of export markets diversification for Russia. Therefore, this study is a baseline attempt to explore determinants of export flow along with identifying potential export markets. This objective is realized by employing an augmented version of gravity model on export flow of Russian Federation to 108 trading partners from 2000 to 2020.

The augmented gravity model of export flow is estimated by using employing contemporary panel econometrics such as panel generalized ordinary least square estimation technique with cross-sectional weight along with heteroskedasticity consistent white coefficients is employed to explore impact of selected macroeconomic and policy variables. Furthermore, the sensitivity analysis is performed by using panel random effect along with the Driscoll–Kraay standard errors with pooled ordinary least squares (OLS) regression and random effect generalized least square (GLS) estimator techniques. The estimated result of panel GLS technique is subjected to in-sampled forecasting technique to explore potential export markets.

The findings show that an increase in the income of trading partners and enhancement of domestic production capacity has significant positive impact on Russian export flow, whereas geographic distance has a significant negative impact. Income of trading partners emerged as major determinant of export flow with high explanatory power. Among augmented variables, the real exchange rate reveals a significant positive impact of lower intensity, whereas binary variables for the common border, common history and preferential/free trade agreement show a significant positive impact. The finding of export potential reveals a high concentration of export with existence of large potential for exports across the globe. For instance, many developing countries in Asia, Africa and America reveal high potential for Russian exports.

The findings urge Russian Federation to diversify its export markets by targeting potential export markets. Many emerging developing countries are witnessing a high potential for Russian exports, therefore attempts should be taken to diversify toward them. The expansion of existing transportation facilities along with development of cargo trade can be important policy instrument to realize objective of export diversification.

This study is the first comprehensive analysis that employs augmented gravity model to explore potential export markets for Russian Federation by using panel data of 108 global trading partners from 2000 to 2020. This finding of this study provides a framework of export diversification toward potential markets across the globe.

The purpose of this paper is to examine the determinants of foreign direct investment (FDI) flows from some leading developed countries (the USA, Japan, Germany, the Netherlands, the UK and France) into major four Asian economies (China, Korea, India and Singapore).

Using one basic and four augmented versions of gravity model technique, the authors tried to examine the determinants of bilateral FDI flows in four major Asian economies. The study used World Development Indicators, CEPII, KOF and Heritage Foundation data for period 2001–2012.

The results revealed that besides the market size for host and source country, other criteria such as distance, common language and common border also influence foreign investors. Other macroeconomic factors such as inflation rate and real interest rate are among the key factors that attract more FDI. In addition to economic factors, institutional and infrastructural factors such as telecommunication, degree of openness, index of globalisation and index of economic freedom also stimulate the international investors from the developed world to the major Asian countries.

It is altogether possible that only a set of home country specific characteristics or host country specific characteristics does not matter when determining FDI. Most empirical studies using indices such as the index of globalisation and economic freedom are subject to certain methodological limitations such as model selection, parameter heterogeneity, outliers and moral hazard.

More distance between the host and source country would result in less FDI flows due to more managerial and raw material supply chain cost. Similarly, more gross domestic product (GDP) and per capita income (PCI) are leading to more FDI flows into Asian economics. Therefore, major Asian economies should frame their economic policies in such a manner where these counties can strengthen their GDP as well as PCI. Furthermore, above countries should open its economy more and more for better FDI flows as it seems that economic globalisation and economic freedom are major determinants of bilateral FDI flows. The negative impact of inflation and interest rate should be controlled.

From policy perspective, higher scores of economic, social and political globalisation also attract high FDI to the host country. On the same line higher scores in economic freedom mean that less restrictions in terms of economic policies and the policy environment are conducive for free trade and resource transfers. Higher scores in trade freedom, investment freedom and freedom from corruptions also show more developed and conducive policy environment. In the same reasoning higher scores in the composite index of economic freedom which takes information from trade freedom, investment freedom and freedom from corruption and others also encourage flow of FDI in to the host country.

This is the first paper which combines the globalisation index, economic freedom index and distance along with some major macroeconomic variables.

This study attempts to explore the determinants of tourism demand that impact tourist arrivals in Australia from Asia using an augmented panel gravity model.

The augmented panel gravity model was utilised to analyse the demand for Australian tourism from 15 major countries of Asia over the period 1991 to 2018. Tourist arrivals were the dependent variable while per capita gross domestic product (GDP) and weighted distance were important explanatory variables. Further other indicators like population, money supply, globalisation, price index, exchange rate, uncertainty and two dummy variables were added as control variables.

The results demonstrate based on the novel methodology of Pesaran (2006), namely CCE (common correlated effects) that tourist arrivals are impacted positively and significantly by per capita GDP of both the country of origin and destination country, globalisation also impacts tourist flows positively. However, tourist arrivals are adversely affected by distance and prices confirming the economic theory.

Gravity models have been intensively used in the recent literature on tourism; however, this study has attempted to explore tourism demand from Asia into Australia which is indeed an unexplored area further the study has used the CCE methodology which takes care of the problems of cross-sectional dependence unlike the earlier methods widely used in the literature like the DOLS and the FMOLS. Last by utilising a wide-ranging set of macro factors the study contributes a novel assessment to the recent literature on tourism demand model.

The purpose of this paper is to analyse the role of the enlargement process of the European Union as a factor fostering international competitiveness of EU Member States. The paper argues that the economic integration process has reduced the technological gap between old and new EU Member States, and this pattern of technological innovation can partially explain the strong impulse on the export dynamics of European countries.

The paper builds an augmented gravity model by including the role of technological innovation, proxied by the stock of knowledge at the sector level. The authors gather together information on patents applied to international offices and bilateral export flows available from COMTRADE dataset.

By using a dynamic panel data estimator the authors find three main empirical evidences. First, the enlargement process has produced an overall larger positive impact on export flows for new Members than for old ones, and more importantly that sectors with the higher technological content have received the strongest impulse. Second, the augmented gravity model allows shaping the crucial role of technological innovation in fostering export competitiveness. Third, this impact seems to be stronger for old EU Member States than for new ones.

The major limitation concerns time span adopted in this work. By expanding the dataset to further years it could be possible to better disentangle the effects also related to the new wave of the EU enlargement.

The policy implication derived is that the more the new EU Members catch up technologically as a result of the integration process, the more they will benefit in terms of economic development.

The major originality of this paper is the construction of an augmented gravity model by including the role of technological innovation, applied to distinguished manufacturing sectors in a dynamic panel setting.

The main purpose of this paper is to identify the major determining factors of Bangladesh trade and to investigate whether the gravity model correctly explains Bangladesh's trade patterns and then estimate the global trade potential of Bangladesh using an augmented gravity model.

Based on a panel data, a dynamic gravity model has used to estimate Bangladesh's trade potential with her major trading partners.

One of the major findings of the paper is that a large part of Bangladesh's potential trade has remained unrealized. The estimated results indicate Bangladesh tends to trade more with larger economies in general and for import developing economies in particular. The rising trade transaction cost is one of the major trading barriers causing high unrealization of trade potential in Bangladesh.

The paper concludes that liberalization of non‐policy barriers will spur Bangladesh's trade, particularly in time of ongoing global economic and financial crisis. Improvement in infrastructure that leads to reduce trade transportation costs should be a necessary step in order to unleash Bangladesh's trade potential.

This paper is the first‐ever attempt to estimate the trade potential of Bangladesh using dynamic gravity model in the pre‐ and post‐global economic and financial crisis period.

The gravity theory of trade explains the potential for trade between nations, but its application to trade in halal food has been questioned by previous studies. This study aims to investigate this issue and the role of trading partners’ economic strength and their distance from one another to identify Malaysia’s potential to export food to key halal markets.

The gravity theory of trade was used to examine Malaysia’s top 10 food exports to key halal markets from 2000–2017. The gravity panels were estimated using the Hausman-Taylor modelling technique to control for endogeneity within the model.

The application of the gravity theory of trade to a halal market context provides mixed results. Although the high economic strength (gross domestic product) of the trading partners enhances halal trade, the distance between the partners does not affect the volume of halal food exports. Moreover, the study identifies Malaysia’s potential to export only a few food commodities to key halal markets.

This study challenges the applicability of the gravity theory of trade to the halal food market. The study extends the model with additional controls for behavioural aspects and applies it to commodity-specific segregated trade in halal food. The findings underscore the need to extend the theory beyond its current focus when explaining trade opportunities in halal markets.

This paper aims to investigate the determinants of international bilateral tourism demand in countries of Southern Common Market (specifically, Argentina, Brazil and Uruguay) and Chile.

In this study, an augmented gravity model is used to investigate the determinants of international bilateral tourism demand in countries of Southern Common Market. The novel aspect of the analysis is that three models of tourism are defined, depending on the spatial distribution of tourist arrivals and departures. An intra-regional model, an extra-regional model and a general model are estimated using a dynamic panel data model.

The results indicate that traditional gravity variables are significant in explaining bilateral inbound arrivals, but the characteristics and the behavior of the demand of tourism vary on whether the country belongs to the sub-regional bloc.

The differences found in this paper might have some impacts on the desired design and direction of the touristic policies of each country.

This study analyzes the determinants of international tourism demand through different bilateral relationships, differentiating between intra- and extra-block tourisms.

As a coastal emerging country, export-led marine economy has been the development model of Vietnam over the past decades since The Renovation 1986. Given the rise of globalization, regional economic integration and logistics enhancement have been identified as key engines for economic sustainability by Vietnamese government. Nevertheless, little sectoral and sub-sectoral evidence has been given for the platform shaped by policies relevant to export, logistics performance and regional economic integration. The paper employs the trade gravity model to study the relationship between seafood export, logistics performance and regional economic integration in the case of Vietnam. Sectoral and sub-sectoral trade gravity models are employed. Logistics performance from the exporter-side and importer-side is included in the estimations. Membership to effective regional trade agreements of Vietnam are proxies for regional economic integration. Zero trade issue is resolved by the Pooled Ordinary Least Squares (POLS), Poisson Pseudo-Maximum Likelihood (PPML) and Heckman Sample Selection estimations, while endogeneity is tackled by the difference and system Generalized Method of Moments (GMM) models. Findings vary by estimation methods, data levels, product groups, and whether which side is considered. In addition, theoretical contributions and some seafood export-driving policy recommendations relevant to regional economic integration and logistics performance development are discussed.

The purpose of this paper is to estimate the import demand function for halal meat in member countries of the Organization of Islamic Cooperation (OIC) and to suggest some policy recommendations for OIC members that can enhance intra-OIC halal meat trade.

By using an augmented gravity model, this study empirically estimates the major determinants of halal meat import demand in OIC member countries. Moreover, a major determinant is the difference in Islamic jurisprudence (fiqh).

The results of this study show that the variation in Islamic jurisprudence is one of the primary determinants of intra-regional trade of halal meat import demand in OIC member countries.

Although trade flows are set up in several years and lag variables are well capable to examine trade flows, this study only includes the static nature of halal meat trade flows toward selected top 20 OIC member countries.

This study suggests that developing a common halal meat market and one halal certification body under the OIC can enhance intra-OIC halal meat trade, this may be a challenge given the five diverse interpretations of halal meat within Islamic jurisprudence among OIC member countries.

This paper identifies the role of Islamic jurisprudence (fiqh) in determining the import demand of halal meat in OIC countries, which has not been addressed in empirical literature. It also provides some policy implications to ameliorate the declining trend of intra-OIC trade flows of halal meat.

Political risk factors play a pivotal role in determining the bilateral trade flow of Asian countries in general and the Association for Southeast Asian Nations (ASEAN) countries in particular. The main purpose of this research paper is to examine the impact of disaggregated political risk in lowering the bilateral trade flow of Thailand, a prominent member of ASEAN, vis-à-vis her 132 trading partners.

Using panel data of Thailand with her partner countries for the period 1984–2015, this paper uses four different panel specifications named pooled ordinary least squares and random effects estimations (estimated generalized least squares estimation) of three types by controlling for cross-sectional heteroscedasticity, time-wise heteroscedasticity and contemporaneous correlation.

Holding other gravity-based determinants constant, for one unit increase in the ranking of indicator of military in politics at home and abroad, trade flow decreases by 5–9% of the total trade flow of Thailand per year. For other types of political risks like government instability at home and abroad, difficulties in investment profile at home and abroad and internal and external conflict at home and abroad, the decrease is also substantial and most statistically significant. The magnitude of loss due to the military channel at home and abroad can amount to US$9.38–US$16.88 bn per year for Thailand, after controlling for other gravity variables.

The reasons for risk originating from different political channels could be explored at the regional or global level to understand their global and local dimensions.

Policymakers should attempt to resolve the political risks at home and abroad in an amicable manner, through dialogue, so that bilateral trade flow is not inhibited.

By taking economic reforms only, the trading problem cannot be resolved until and unless Thailand involves her society, politics and administrative mechanisms in a conducive manner to facilitate her trade. A dialogue among bureaucracy, political authority and military is beneficial in mitigating political risks.

The paper is unique in the sense that it makes a solid attempt to identify the potential channels of disaggregated political risk in affecting trade flow negatively, in a gravity framework, by controlling for different kinds of error structure.