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Gravity Approach for Analysing Bilateral Trade Flows of the Baltic Rim Countries

Author

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  • Tiiu Paas

    (University of Tartu, Estonia)

Abstract

The gravity equation for analysing the trade flows between the Baltic Rim countries have been elaborated in order to test the hypothesis that the knowledge resulting from universal law of nature is also applicable for exploring bilateral trade flows of the countries. The results of the study support the statement that the size of economy, which is expressed by the size of population, has statistically significant and positive influence on the bilateral trade flows. Distance has a negative impact on trade flows expressing most significantly cultural proximity and historical relationship between the countries of the region. The Baltic rim regional integration effect in trade is inherently larger for small countries.

Suggested Citation

  • Tiiu Paas, 2002. "Gravity Approach for Analysing Bilateral Trade Flows of the Baltic Rim Countries," Zagreb International Review of Economics and Business, Faculty of Economics and Business, University of Zagreb, vol. 5(Special C), pages 83-96, December.
  • Handle: RePEc:zag:zirebs:v:5:y:2002:i:sci:p:83-96
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    More about this item

    Keywords

    gravity models; international trade flows; regional integration; the Baltic rim;

    JEL classification:

    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics

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