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An Augmented Gravity Model of South Africa's Exports of Transport Equipments and Machineries

Author

Listed:
  • 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 augmented gravity equation to South Africa's 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 Africa's optimistic, pessimistic and average potential exports to the 76 countries. Finally, estimates of the degree of variability of average potential exports are provided, which show that South Africa's trade with Germany, the United Kingdom and the United States have low variability.

Suggested Citation

  • Moses M. Sichei & Jean Luc Erero & Tewodros Gebreselasie, 2005. "An Augmented Gravity Model of South Africa's Exports of Transport Equipments and Machineries," Working Papers 200513, University of Pretoria, Department of Economics.
  • Handle: RePEc:pre:wpaper:200513
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    More about this item

    Keywords

    Gravity equation; dynamic panel data; trade potential; transport equipment and machineries;

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • C65 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Miscellaneous Mathematical Tools

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