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GTAP Resource #2738

"Understanding BRIICS’ trade performance: analysis of unobserved heterogeneity in the gravity model of international trade"
by Kowalski, Przemyslaw

What have been the main driving forces behind the rising trade of large emerging economies such as China, India or Brazil? What is driving the phenomenal trade growth rates in China? Why India’s trade seems to be growing less dynamically? Why is Brazil’s trade lingering around 1% of world trade since the beginning of 1970s? Are the fastest growing emerging economies trading above or below their potentials? These are the questions that often underpin discussions about the opportunities and threats associated with the increasing presence of large emerging economies in the world economy.

This paper presents an approach to analyzing bilateral trade data based on the gravity model of international trade and the fixed effects approach to analyzing panel data and applies it to the analysis of trade of Brazil, Russian Federation, India, Indonesia, China and South Africa (BRIICS). First, the gravity model of aggregate bilateral trade, which is a basis for specification of a fixed effects empirical panel data model of bilateral trade estimated here, is introduced and issues associated with its application to inference about countries’ trade performance are discussed. Subsequently, an empirical gravity-based model is devised and estimated on a panel data of unidirectional bilateral merchandise trade flows between 46 countries including all the OECD countries plus Brazil, India, Indonesia, China, Russian Federation and South Africa (BRIICS) and a number of other countries that are relatively significant players in world trade or are important trading partners of any of the BRIICS. The analysis covers the 1985-2006 period and is conducted for total trade as well as four broad product categories including raw materials, intermediate goods, consumption goods and capital goods.

Resource Details (Export Citation) GTAP Keywords
Category: 2008 Conference Paper
Status: Published
By/In: Presented at the 11th Annual Conference on Global Economic Analysis, Helsinki, Finland
Date: 2008
Created: Kowalski, P. (4/15/2008)
Updated: Kowalski, P. (4/15/2008)
Visits: 1,705
- Economic development
- Asia (East)
- Asia (Southeast)
- Commonwealth of Independent States
- South America

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