Moses M. Sichei (Department of Economics, University of Pretoria) Jean Luc Erero (Department of Economics, University of Pretoria) Tewodros Gebreselasie (Department of Economics, University of Pretoria)
Abstract
The study applies an ÒaugmentedÓ gravity equation to South AfricaÕs exports of motor vehicles, parts & accessories (SIC 381-383) to 76 countries over the period 1994 to 2003. The study employs a dynamic panel data model to estimate long-run and short-run coefficients. First, it is shown that it takes about 16 months for exports to adjust. Second, a number of variables, namely, importer income, population, exchange rate, distance, free trade agreements are important determinants of bilateral trade flows for motor vehicles, parts & accessories. Third, the gravity model is solved stochastically to determine South AfricaÕs ÒoptimisticÓ, ÒpessimisticÓ and ÒaverageÓ potential exports to the 76 countries. Finally, estimates of the degree of variability of ÒaverageÓ potential exports are provided, which show that South AfricaÕs trade with Germany, the United Kingdom and the United States have low variability.
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Publisher Info
Paper provided by University of Pretoria, Department of Economics in its series Working Papers with number
200513.
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