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International Trade Performance: The Gravity of Australia's Remoteness

Author

Listed:
  • Bryn Battersby

    (Treasury, Government of Australia)

  • Robert Ewing

    (Treasury, Government of Australia)

Abstract

This paper examines how distance and economic size influence the level of international trade. Parameters for an international gravity trade model are estimated and used to calculate annual expected aggregate trade for Australia over the last 20 years. This model also includes a new indicator of economic remoteness that statistically identifies each country's distance from world economic activity. The results indicate that Australia may have been performing slightly better than the gravity trade model predicts given its geographic remoteness. The parameters from the model are also used to construct a simple indicator of trade performance, which suggests that Australia performs well relative to a range of similarly developed economies.

Suggested Citation

  • Bryn Battersby & Robert Ewing, 2005. "International Trade Performance: The Gravity of Australia's Remoteness," Treasury Working Papers 2005-03, The Treasury, Australian Government, revised Jun 2005.
    • Handle: RePEc:tsy:wpaper:wpaper_tsy_wp_2005_3
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    File URL: http://archive.treasury.gov.au/documents/999/PDF/GravityandTrade.pdf
    File Function: First version, 2005
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    References listed on IDEAS

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    Cited by:

    1. Mikrajuddin Abdullah, 2023. "Theoretical foundation for the Pareto distribution of international trade strength and introduction of an equation for international trade forecasting," Papers 2309.00635, arXiv.org.
    2. Simon Guttmann & Anthony Richards, 2006. "Trade Openness: An Australian Perspective," Australian Economic Papers, Wiley Blackwell, vol. 45(3), pages 188-203, September.
    3. Crespo, Nuno & Fontoura, M. Paula & Simoes, Nadia, 2014. "Economic Centrality: How Much is Economics and How Much is Geography?," MPRA Paper 58028, University Library of Munich, Germany.
    4. Muhammad Umair & Muhammad Ramzan Sheikh & Asifa Tufail, 2022. "Determinants Of Pakistan’S Bilateral Trade With Major Trading Partners: An Application Of Heckscher-Ohlin Model And Tinbergen Gravity Model," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 11(1), pages 24-36, March.
    5. Peter Hall & Robert Wylie, 2014. "Isolation and technological innovation," Journal of Evolutionary Economics, Springer, vol. 24(2), pages 357-376, April.
    6. Cortes, Maria, 2007. "Composition of Trade between Australia and Latin America: Gravity Model," Economics Working Papers wp07-19, School of Economics, University of Wollongong, NSW, Australia.
    7. Mariev Oleg & Drapkin Igor & Chukavina Kristina, 2016. "Is Russia successful in attracting foreign direct investment? Evidence based on gravity model estimation," Review of Economic Perspectives, Sciendo, vol. 16(3), pages 245-267, September.
    8. Ben Dolman, 2007. "Patterns of Migration, Trade and Foreign Direct Investment across OECD Countries," DEGIT Conference Papers c012_030, DEGIT, Dynamics, Economic Growth, and International Trade.
    9. Cortes, Maria, 2007. "Examining Patterns of Bilateral Trade between Australia and Colombia by Using Cointegration Analysis and Error-Correction Models," Economics Working Papers wp07-20, School of Economics, University of Wollongong, NSW, Australia.

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    JEL classification:

    • F1 - International Economics - - Trade
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation

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