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A Panel Data Analysis of Jordan¡¯s Foreign Trade: The Gravity Model Approach

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  • Ziad Mohammed Abu-Lila

Abstract

This study aims to identify the most important factors affecting the flow of Jordanian foreign trade, with its main trading partners for the period (1995-2016). To achieve this objective, the gravity model was adopted using a random effects model. The empirical findings show that Jordan¡¯s foreign trade is positively determined by Jordan¡¯s RGDP and dummy variable that used to capture the effect of a common border with Jordan. On the other side, distance and similarity index are found to be significant factors in influencing Jordanian foreign trade negatively. Finally, the study found that the RGDP of trade partner and bilateral real exchange rate are not statistically significant.

Suggested Citation

  • Ziad Mohammed Abu-Lila, 2018. "A Panel Data Analysis of Jordan¡¯s Foreign Trade: The Gravity Model Approach," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 10(1), pages 204-212, January.
    • Handle: RePEc:ibn:ijefaa:v:10:y:2018:i:1:p:204-212
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    References listed on IDEAS

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    3. Yeshineh, Alekaw Kebede, 2016. "Determinants and Potentials of Foreign Trade in Ethiopia: A Gravity Model Analysis," MPRA Paper 74509, University Library of Munich, Germany.
    4. Thornton, John, 1996. "Cointegration, causality and export-led growth in Mexico, 1895-1992," Economics Letters, Elsevier, vol. 50(3), pages 413-416, March.
    5. Kiyong Keum, 2010. "Tourism flows and trade theory: a panel data analysis with the gravity model," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 44(3), pages 541-557, June.
    6. Walter Isard, 1954. "Location Theory and Trade Theory: Short-Run Analysis," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 68(2), pages 305-320.
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    Cited by:

    1. Sadok ACHOUR & Dr. Fatima HADJI, 2021. "Determinants of trade flows to Agadir Agreement countries: gravity model three-way approach," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(2(627), S), pages 125-134, Summer.

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    More about this item

    Keywords

    foreign trade; gravity model; Jordan; panel data;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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