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A Gravity Model for Components of Imports

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  • Kandogan, Yener
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    Abstract

    This paper develops a gravity model to explain different components of imports. It is shown that specific variables from competing trade theories affect each component differently: As economic sizes or relative factor endowments become similar, the volume of intra-industry imports, especially that of its horizontal component increases. Furthermore, the typical variables of an extended gravity model have different impact on each component: Colonial relations are important determinants of inter-industry imports whereas cultural proximity based on religion and language plays a more crucial role in determining intra-industry imports. Overall, the significance of these different effects suggests that the proposed decomposition of imports into its components removes a widespread but unnecessary restriction in the gravity models.

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    Bibliographic Info

    Article provided by Review of Applied Economics in its journal Review of Applied Economics.

    Volume (Year): 5 (2009)
    Issue (Month): 1-2 ()
    Pages:

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    Handle: RePEc:ags:reapec:143222

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    Web page: http://www.lincoln.ac.nz/story11874.html

    Related research

    Keywords: Horizontal and vertical intra-industry trade; cultural proximity; religion; International Development; International Relations/Trade; Marketing; F10; F14;

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    1. repec:att:wimass:9713 is not listed on IDEAS
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