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Determinants and barriers to bilateral trade A study on developing economies

Author

Listed:
  • Subhani, Muhammad Imtiaz
  • Osman, Ms.Amber
  • Khokhar, Rabbia

Abstract

World trade has grown rapidly. Several factors are highlighted by literature as a driving force behind the growth of world trade. Reduction in barriers to trade is one of them. A comprehensive empirical investigation is carried to ascertain the trade reducing and increasing effect of barriers to trade which are also known determinants of trade. The modified gravity model developed in this study analyses the effect of GDP, distance,remittances, FDI, transportation cost, exchange rate, inflation, population, import and export on trade flows. The study revealed that the population, import and transportation cost, distance, Tariff imposed by trading partner, FDI and Population of trading country are the determinants and significantly affect exports of developing economies. The study also ascertain that transportation cost, distance, population of trading partner, FDI of both trading countries and remittances of trading partner are the determinants that have major impact on import of developing nations.

Suggested Citation

  • Subhani, Muhammad Imtiaz & Osman, Ms.Amber & Khokhar, Rabbia, 2010. "Determinants and barriers to bilateral trade A study on developing economies," MPRA Paper 26179, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:26179
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    More about this item

    Keywords

    International Trade; Exports; Imports; Gravity Model; Trade barriers;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy
    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
    • N7 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services
    • A10 - General Economics and Teaching - - General Economics - - - General
    • P33 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - International Trade, Finance, Investment, Relations, and Aid
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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