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Portuguese Trade and European Union: The Gravity Model

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  • Leitão, Nuno Carlos
  • Tripathi, Sabyasachi

Abstract

This research examines the determinants of bilateral trade between Portugal and European Union countries (EU-27) for the period 2000-2010, using a panel data. In this study we revisited the recent contribution as in Charoensukmongkol and Sexton (2011), Samy and Dehejia (2011), Serrano and Pinilla (2012), and Faustino and Proença (2011). The findings show that Portuguese trade flows are according the Linder hypothesis. The international trade is explained by Heckscher-Ohlin theorem. The empirical results demonstrate that geographical distance has a negative and significant effect on bilateral trade, i.e., there is a bilateral trade increase when trade partners are close. The economic dimension and common border are positively correlated with bilateral trade. Our results also support the hypothesis that physical capital endowment has a positive effect on bilateral trade.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 45994.

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Date of creation: Apr 2013
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Handle: RePEc:pra:mprapa:45994

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Keywords: Gravity model; panel data; common border; geographical distance and factor endowment.;

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  1. Subrata Ghatak & Monica Ioana Pop Silaghi & Vince Daly, 2009. "Trade and migration flows between some CEE countries and the UK," The Journal of International Trade & Economic Development, Taylor & Francis Journals, Taylor & Francis Journals, vol. 18(1), pages 61-78.
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  3. Yiagadeesen Samy & Vivek H. Dehejia, 2008. "Trade and Labor Standards in the European Union: A Gravity Model Approach," Carleton Economic Papers 08-08, Carleton University, Department of Economics.
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  6. Ra� l Serrano & Vicente Pinilla, 2012. "The long-run decline in the share of agricultural and food products in international trade: a gravity equation approach to its causes," Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 44(32), pages 4199-4210, November.
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