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Coulomb-like Model for International Trade Flow and Derivation of Distribution Function for Trade Flow Strength

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  • Mikrajuddin Abdullah

Abstract

To describe international trade flows, we propose the coulomb force formulation, in which the magnitude of the charge represents gross domestic product (GDP) and the distance between countries is the bilateral distance, the product of spatial distance and "dielectric constant," rather than the spatial distance as used in the gravitation model, allowing it to be time dependent. The "dielectric constant" is influenced by factors such as warfare, transportation disruptions, trade agreements, social, geography, politics, culture, and others. The GDP and distance power parameters were estimated using data from high-GDP countries' export-import transactions. We also developed a trade strength distribution equation that fits World Bank data reasonably well over a decade.

Suggested Citation

  • Mikrajuddin Abdullah, 2021. "Coulomb-like Model for International Trade Flow and Derivation of Distribution Function for Trade Flow Strength," Papers 2109.14554, arXiv.org, revised Jan 2023.
    • Handle: RePEc:arx:papers:2109.14554
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    1. repec:hal:spmain:info:hdl:2441/4rjrv0vgc898s8iaonto3q54cg is not listed on IDEAS
    2. Bergstrand, Jeffrey H, 1985. "The Gravity Equation in International Trade: Some Microeconomic Foundations and Empirical Evidence," The Review of Economics and Statistics, MIT Press, vol. 67(3), pages 474-481, August.
    3. Nazia Gul & Hafiz M. Yasin, 2011. "The Trade Potential of Pakistan: An Application of the Gravity Model," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 16(1), pages 23-62, Jan-Jun.
    4. Thomas Chaney, 2017. "The Gravity Equation in International Trade: an Explanation," Post-Print hal-03389309, HAL.
    5. Howard J. Wall, 1999. "Using the gravity model to estimate the costs of protection," Review, Federal Reserve Bank of St. Louis, issue Jan, pages 33-40.
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