Usage Of Gravity Model In Evaluating Foreign Trade Between Bosnia And Herzegovina And Montenegro As Members Of Cefta Agreement 2006

Ferhat Ćejvanović (), Dragovan Miličević and Adnan Kamerić
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Ferhat Ćejvanović: University of Tuzla, Faculty of Economics,Tuzla, Bosnia and Herzegovina
Dragovan Miličević: VIPOS, Valjevo Business School of Applied Studies, Serbia
Adnan Kamerić: University „Vitez“ Travnik, Bosnia and Herzegovina

Poslovna izvrsnost/Business Excellence, 2018, vol. 12, issue 1, 143-159

Abstract: The analysis of foreign trade in global trading of today requires the usage of macro-analytical activities which are based on contemporary and classical evaluation methods, trading measurements and macroeconomic indicators of economic stability and growth. This paper starts from the idea and the need to evaluate the influence of foreign trade between Bosnia and Herzegovina using the gravity model. The aim of this paper has been set based on this idea and is reflected in the advantages and disadvantages of using the gravity model in evaluating foreign trade between Bosnia and Herzegovina and Montenegro. The gravity method in foreign trade evaluates the potentials between some countries taking into consideration real trade value. It also takes into account the potential and costs of trading, as well as the distance of the analysed market. This paper starts accordingly from the assumption that the usage of the gravity model can evaluate the potential of import and export between two countries and in this way make assumptions about how to increase competitiveness among trading companies. The paper presents the potential for import and export from Bosnia and Herzegovina based on the results of the research. Sources of the data used in this paper are primarily the statistical publications of Bosnia and Herzegovina and Montenegro, as well as data available on the internet.

Keywords: foreign trade; gravity model; evaluation; CEFTA agreement 2006; economic growth (search for similar items in EconPapers)
Date: 2018
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