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Gravity Modeling: International Trade and Innovations

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  • Josheski, Dushko
  • Fotov, Risto

Abstract

In this paper issue of gravity modeling in international trade has been investigated. Standard gravity equation augmented with other variables to control for transportation cost, whether trade partners are neighbors and whether country is landlocked, or countries participants in trade have had colonial history together. Also in our model we control whether traded commodities are homogenous, differentiated or high tech , as well referenced. Variable to denote technology are :TAI index, which stands for technological achievement index, also variables for creation and diffusion of technology , as measured by the number of patents from the residents and royalty and license fees receipts, by the foreign citizens. Results are as expected and the show that trade is highly dependent on the exporters and importers levels of technology --

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Paper provided by ZBW - German National Library of Economics in its series EconStor Preprints with number 71060.

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Date of creation: 26 Mar 2013
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Handle: RePEc:zbw:esprep:71060

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Keywords: gravity model; bilateral trade;

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  1. David T. Coe & Elhanan Helpman, 1993. "International R&D Spillovers," NBER Working Papers 4444, National Bureau of Economic Research, Inc.
  2. Anderson, James E, 1979. "A Theoretical Foundation for the Gravity Equation," American Economic Review, American Economic Association, vol. 69(1), pages 106-16, March.
  3. Wacziarg, Romain & Spolaore, Enrico & Alesina, Alberto, 2000. "Economic Integration and Political Disintegration," Scholarly Articles 4553029, Harvard University Department of Economics.
  4. Bikker, Jacob A, 1987. "An International Trade Flow Model with Substitution: An Extension of the Gravity Model," Kyklos, Wiley Blackwell, vol. 40(3), pages 315-37.
  5. Richard K. Abrams, 1980. "International trade flows under flexible exchange rates," Economic Review, Federal Reserve Bank of Kansas City, issue Mar, pages 3-10.
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