Gravity Model by Panel Data Approach: Empirical Evidence from Nigeria

Shehu Aliyu and Sani Bawa

MPRA Paper from University Library of Munich, Germany

Abstract: Gravity trade model continue to be coveted for analysis of determinants trade flows among countries despite its lack of theoretical foundations. The main aim of the paper is to assess the determinants of flow of Nigeria’s exports using longitudinal data from 1999 to 2012. Extrapolating from the empirical literature, the paper constructs Nigeria’s gravity trade model comprising of 9 EU countries, BRICS countries, Canada, Japan and the US. Results from POOL and panel regressions – fixed and random effects show that market size, price index of destination countries positively drive trade flows in Nigeria, while relative factor endowment, economic similarities and geographical distance negatively affect Nigeria’s trade flows. Furthermore, the paper found evidence in support of positive trade flows with the EU countries and negative trade flows with BRICS and on account of cultural difference. Findings show that Nigeria’s exports follow Linder hypothesis. These have important implications for economic, socio-cultural and bilateral trade negotiations for better trade performance in Nigeria in the future.

Keywords: Gravity model; trade flows; panel data; Linder hypothesis; relative factor endowment; economic bloc (search for similar items in EconPapers)
JEL-codes: C23 F14 F15 L88 (search for similar items in EconPapers)
Date: 2013-10-06, Revised 2014-06-04
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published in International Journal of Trade and Global Markets 1.8(2015): pp. 42-57

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/52549/1/MPRA_paper_52549.pdf original version (application/pdf)

Related works:
Journal Article: Gravity model by panel data approach: empirical evidence from Nigeria (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:52549

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter (winter@lmu.de).