Essay on Determinants of International Trade

22462 Words Aug 27th, 2015 90 Pages
UNDERSTANDING THE DETERMINANTS OF INTERNATIONAL
TRADE IN AFRICAN COUNTRIES: AN EMPIRICAL ANALYSIS
FOR GHANA AND SOUTH AFRICA

LAURA MÁRQUEZ-RAMOS
Universitat Jaume I

Instituto de Economía Internacional
ABSTRACT
There are clear economic differences between developed and developing countries that lead to a different behaviour among them in the determinants of bilateral trade flows.
Although a number of authors have focused on the determinants of the trade patterns, further research is needed for a better understanding of what goods and with which countries developed and developing economies trade. This paper focuses on the determinants of international trade in African countries. From an empirical perspective, two African
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According to Frankel (2000) it is desirable to disaggregate to get a better estimate since too much emphasis is not put on individual estimates that may be exposed to

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estimation error. Additionally, heterogeneity issues should be considered when analysing international trade patterns since determinants of international trade flows may differ across both countries and industries. From a gravity context, several authors have analysed whether there are different trade patterns for developed and developing countries (Loungani, Mody and Razin, 2002; Martínez-Zarzoso and Márquez-Ramos,
2005). Sector-heterogeneity has also been taken into account in gravity (Rauch, 1999;
Tang, 2006).
In Section 2 special attention is paid to heterogeneity issues in the main determinants of international trade. Two types of heterogeneity are differentiated: country-heterogeneity and sector-heterogeneity. In Section 3 data, sources and variables are described. Section 4 presents the model specification to be estimated. In Section 5 an index measuring the intensity of exports of countries is used in a preliminary analysis to show the main determinants that foster that Ghana and South Africa trade with specific partners.
Moreover, the empirical estimation is carried out for exports from Ghana and South
Africa to 167 importer countries. At last, Section 6 presents conclusions and it discusses
socio-economic

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