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Usage Of Gravity Model In Evaluating Foreign Trade Between Bosnia And Herzegovina And Montenegro As Members Of Cefta Agreement 2006

Author

Listed:
  • Ferhat Ćejvanović

    (University of Tuzla, Faculty of Economics,Tuzla, Bosnia and Herzegovina)

  • Dragovan Miličević

    (VIPOS, Valjevo Business School of Applied Studies, Serbia)

  • Adnan Kamerić

    (University „Vitez“ Travnik, Bosnia and Herzegovina)

Abstract

The analysis of foreign trade in global trading of today requires the usage of macro-analytical activities which are based on contemporary and classical evaluation methods, trading measurements and macroeconomic indicators of economic stability and growth. This paper starts from the idea and the need to evaluate the influence of foreign trade between Bosnia and Herzegovina using the gravity model. The aim of this paper has been set based on this idea and is reflected in the advantages and disadvantages of using the gravity model in evaluating foreign trade between Bosnia and Herzegovina and Montenegro. The gravity method in foreign trade evaluates the potentials between some countries taking into consideration real trade value. It also takes into account the potential and costs of trading, as well as the distance of the analysed market. This paper starts accordingly from the assumption that the usage of the gravity model can evaluate the potential of import and export between two countries and in this way make assumptions about how to increase competitiveness among trading companies. The paper presents the potential for import and export from Bosnia and Herzegovina based on the results of the research. Sources of the data used in this paper are primarily the statistical publications of Bosnia and Herzegovina and Montenegro, as well as data available on the internet.

Suggested Citation

  • Ferhat Ćejvanović & Dragovan Miličević & Adnan Kamerić, 2018. "Usage Of Gravity Model In Evaluating Foreign Trade Between Bosnia And Herzegovina And Montenegro As Members Of Cefta Agreement 2006," Poslovna izvrsnost/Business Excellence, Faculty of Economics and Business, University of Zagreb, vol. 12(1), pages 143-159.
    • Handle: RePEc:zag:busexc:v:12:y:2018:i:1:p:143-159
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    References listed on IDEAS

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    1. Jeffrey A. Frankel, 1997. "Regional Trading Blocs in the World Economic System," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 72, April.
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    3. Paul Brenton & Francesca Di Mauro & Matthias Lücke, 2014. "Economic Integration and FDI: An Empirical Analysis off Foreign Investment in the EU and in Central and Eastern Europe," World Scientific Book Chapters, in: INTERNATIONAL TRADE, DISTRIBUTION AND DEVELOPMENT Empirical Studies of Trade Policies, chapter 7, pages 125-151, World Scientific Publishing Co. Pte. Ltd..
    4. Anderson, James E, 1979. "A Theoretical Foundation for the Gravity Equation," American Economic Review, American Economic Association, vol. 69(1), pages 106-116, March.
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