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A Gravity Model for Components of Imports

  • Kandogan, Yener
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    This paper develops a gravity model to explain different components of imports. It is shown that specific variables from competing trade theories affect each component differently: As economic sizes or relative factor endowments become similar, the volume of intra-industry imports, especially that of its horizontal component increases. Furthermore, the typical variables of an extended gravity model have different impact on each component: Colonial relations are important determinants of inter-industry imports whereas cultural proximity based on religion and language plays a more crucial role in determining intra-industry imports. Overall, the significance of these different effects suggests that the proposed decomposition of imports into its components removes a widespread but unnecessary restriction in the gravity models.

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    Article provided by Review of Applied Economics in its journal Review of Applied Economics.

    Volume (Year): 5 (2009)
    Issue (Month): 1-2 ()

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    Handle: RePEc:ags:reapec:143222
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