GRAVITY MODELS OF GROSS TRADE AND VALUE-ADDED TRADE – COMPARATIVE ANALYSIS

In this article similarities and differences between gravity models of gross trade and gravity models of value-added trade are discussed. Gravity models explaining value-added trade are characterized by the higher determination coefficients than gravity models illustrating gross trade. According to the estimation results, more intensive gross and value-added trade are accompanied by higher exporter’s and importer’s GDP and lower the difference in GDP per capita between trading partners. Additionally, shorter geographic distance, common official language and membership in the same regional trading arrangements are much more important for more intensive gross trade than for value added-trade.

Abstract licence: CC BY

A person counts once a day per paper. We keep no cookie and no address: a reader is a hash that changes every day. Any month under five reads shows no number.