The Determinants of Bilateral Trade Flows

ABSTRACT

The complex worldwide trade network has perpetually captivated economists, policymakers, and researchers alike. Understanding the factors behind mutual trade flows is pivotal for formulating effective trade policy, fostering economic expansion, and nurturing international cooperation. This thesis plunges into this elaborate domain by employing the gravitational model as an empirical framework, intending to reveal the multifaceted components that shape trade connections between nations.\

Drawing inspiration from Newton’s Law of Gravity, the gravitational notion proposes that trade movements are influenced by two primary dynamics: financial significance (depicted by GDP) and impediment (exemplified by distance). Expanding upon this foundational structure, this exploration broadens the vista by introducing various variables, such as engagement in regional trade pacts (RTAs), shared language, cultural closeness, indicators of governance, and more. In doing so, the study aims to capture the intricate interplay of financial, geographical, political, and cultural components contributing to global trade dynamics.

To execute this ambitious undertaking, a robust methodology is utilized. The gravitational model is meticulously delineated, incorporating numerous variables guided by theoretical underpinnings. Data for this scrutiny are drawn from reputable sources, such as the U.N. trade repository COMTRADE, the CEPII database for gravity-associated variables, and the World Bank’s Governance Indicators. The amalgamation of these varied datasets facilitates a comprehensive exploration of the factors influencing bilateral trade movements.

The empirical scrutiny rests upon rigorous statistical methods, particularly regression analysis. This approach permits quantifying the impact of each determinant on trade flows while also considering potential interactions. Descriptive statistics, summarising key variables, provides initial insight into the dataset. The core of the analysis resides in the regression findings, where coefficient estimates are interpreted for their significance and scale. This enables identifying which factors exert the most potent sway on trade flows and unveils their respective roles.

The outcomes of this study carry extensive implications. The concrete proof illuminates the nuanced mechanisms via which economic bulk, resistance, and added determinants mould trade interactions. For instance, the influence of regional trade pacts on trade flows is quantified, providing glimpses into the effectiveness of such agreements. Cultural disparity, a relatively less investigated factor, is probed to fathom how diverse cultural aspects impact trade connections.

Significantly, the contributions of this study stretch beyond empirical insights. Amalgamating many theoretical frameworks and practical methodologies enriches the body of knowledge on international trade theory and practice. The thesis identifies gaps in the prevailing literature and illustrates how the gravity model can be expanded to scrutinize trade determinants in a globalized sphere thoroughly.

While this study propels our comprehension, it recognizes its constraints—data availability and quality present challenges, resulting in specific absent values and potential biases. The research concentrates on cross-sectional scrutiny, and delving into dynamic panel frameworks remains an avenue for impending exploration. Furthermore, the ever-evolving panorama of global trade mandates a continuous examination of emerging determinants and their sway on trade flows.

In Conclusion, the determinants of reciprocal trade flows are intricate, diverse, and crucial for worldwide economic collaboration. The empirical analysis of this dissertation, moored in the gravity model, bestows valuable insights into the factors moulding trade interactions among nations. Integrating economic, geographical, political, and cultural facets lends to the ongoing international trade theory and policy discourse. As countries persist in navigating the intricacies of global commerce, the findings and methodologies introduced here proffer a sturdy groundwork for informed decision-making and further exploration of this pivotal domain.

CHAPTER 1: INTRODUCTION & LITERATURE REVIEW

Introduction

Background and significance of studying bilateral trade flows.

Mutual trade streams between nations form the foundation of the worldwide economy, facilitating the exchange of commodities and services that support economic expansion, progress, and global relationships. Examining these trade interactions is vital for economists, decision-makers, and governments. Comprehending the factors that steer mutual trade streams offers perspectives into the dynamics of global commerce, impacting trade policies, nurturing diplomatic connections, and guiding approaches for economic well-being.

In a universe marked by heightened globalization, interlinked supply chains, and swift technological advancements, the movement of commodities across borders has grown more complex than ever before. The intricate network of mutual trade relationships can have extensive repercussions, moulding economic outcomes, geopolitical alignments, and worldwide collaboration.

Drawing parallels from Newton’s Law of Gravity, the gravitational model furnishes a resilient and intuitive framework for comprehending the factors that dictate mutual trade streams. Just as gravitational forces rely on the masses of two entities and the distance between them, the gravitational model posits that trade flows between nations are impacted by their economic groups (approximated by GDP) and the distance that separates them (resistance) (Markusen et al., 2019). This fundamental premise captures the instinctual notion that larger economies possess heightened trade potential and that geographical obstacles can hinder trade.

This dissertation aims to expand the gravitational model beyond its conventional parameters by assimilating a range of supplementary determinants that seize the intricacies of global trade. While GDP and distance remain central, this study incorporates variables such as participation in regional trade agreements (RTAs), shared languages, cultural disparities, and governance indicators. Such a comprehensive approach acknowledges the multifaceted character of trade interactions and the necessity to consider varied economic, cultural, and political dimensions.

The importance of this study lies in its potential to influence policy choices and shape worldwide relations. By comprehending the determinants of mutual trade streams, decision-makers can devise targeted tactics to enrich trade relationships, encourage economic expansion, and optimize mutual advantages. Furthermore, the insights acquired from this research can contribute to the broader discourse on worldwide trade theory, enhancing understanding of how nations engage in the global economic arena (Feenstra, 2020).In a world marked by intricacy and uncertainty, the quest for knowledge about the determinants of mutual trade streams is an ongoing undertaking. This study aims to contribute to this quest by providing empirical insights into the intricate factors that impact trade relationships. As economies persist in evolving, the findings and implications of this research will function as a precious resource for governments, enterprises, and researchers endeavouring to navigate the perpetually shifting landscape of worldwide trade.

Explanation of the gravity model and its analogy with Newton’s Law of Gravity.

The gravitational theory of global commerce, grounded in the research of economists like Tinbergen and Pöyhönen, offers a potent framework for grasping the drivers of mutual trade flows between nations. The theory derives its conceptual basis from Newton’s Gravitational Law, which delineates the pull between two items due to their masses and the distance separating them. In worldwide trade, the gravitational theory proposes that trade movements between two nations are swayed by their economic group (often gauged by GDP) and the gap that divides them.

Analogous to how two massive entities exude a gravitational tug on each other, nations with more substantial economies wield a mightier potential for trade. This economic mass impact implies that larger economies usually engage in more trade due to their capacity to fabricate a broad spectrum of commodities and amenities, thus boosting opportunities for specialization and interchange (Rahman, 2023). Moreover, much like distance affects the potency of gravitational allure, it also functions as a “hindrance” to trade. The increased geographic span between the two nations ushers in escalated conveyance expenditures, intricate logistics, and potentially protracted delivery durations. These aspects function as barriers to trade, curbing the probability and scale of trade engagements.

Integrating the economic mass and distance variables, the equation of the gravitational theory mirrors the intuitive notion that trade between two nations is likelier when their economies are sizable and the geographical gap between them is brief. However, the applicability of the gravitational theory extends beyond these central variables. It has been broadened to encompass supplementary determinants, such as shared language, cultural kinships, and institutional facets, further moulding trade interactions. By adopting the analogy from Newton’s Gravitational Law, the gravitational theory offers an approachable and spontaneous manner to apprehend the intricate dynamics of global trade. It stands as a formidable instrument for both empirical analysis and policy shaping, empowering researchers and policymakers to delve into the myriad of factors influencing bilateral trade flows, all while acknowledging the fundamental economic and geographical influences that underlie worldwide trade relationships.

1.1.3. Research Objectives and Research Questions

This thesis aims to thoroughly examine the determinants of bilateral trade flows using an expanded gravity model framework. This entails delving into the intricate interplay of economic, spatial, societal, and institutional factors that mould international trade relationships. The particular research inquiries guiding this investigation comprise:

1. How do economic size (GDP) and proximity impact bilateral trade flows following the conventional gravity model?
2. To what degree do supplementary determinants like regional trade agreements (RTAs), shared language, cultural disparity, and governance metrics influence trade connections?
3. What insights can be gleaned from incorporating cultural disparity and governance metrics to elucidate variations in bilateral trade flows?
4. How can the gravity model, enhanced with multiple covariates, contribute to a more intricate comprehension of trade dynamics and offer guidance for policy decisions?

Through addressing these research queries, this analysis endeavours to propel our grasp of the factors driving international trade and furnish valuable discernments for policymakers and scholars trying to navigate the intricacies of global commerce.

LITERATURE REVIEW

Overview of International Trade Theories and Their Relevance

Exploring global commerce has stood as a foundational pillar of economics, furnishing insights into the structures and determinants of transnational interchange. Diverse trade hypotheses have materialized over time, each presenting distinct outlooks on the catalysts of trade flows and the repercussions on economies. This segment furnishes a survey of pivotal international trade theories and accentuates their significance in comprehending bilateral trade flows. Time-honoured trade theories, most notably David Ricardo’s doctrine of comparative advantage, emphasize specialization and benefits derived from trade (Rahman, 2023). This principle underscores how nations can reap the rewards by concentrating on manufacturing goods in which they hold a comparative advantage and engaging in trade for goods crafted more skillfully by others. This notion remains significant today, as it extends a fundamental rationale for the reciprocal benefits of international trade.

Building upon classical theories, neoclassical trade doctrines introduce variables such as constituents of production and economies of scale. The Heckscher-Ohlin blueprint underscores how factor endowments (e.g., labour, capital) sway trade patterns. This framework assists in fathoming commodity trade with fluctuating factor intensity and the ramifications on income and labour markets. Additionally, the novel trade theory, as Paul Krugman advocates, introduces economies of scale and imperfect competition as stimuli for trade (Michaelides & Papadakis, 2023). This doctrine elucidates how industries can amass in specific zones, contributing to trade dynamics. It is applicable for explaining the emergence of trade in distinctive products and the role of agglomeration economies.

The gravitational paradigm, which serves as the foundational pillar of this dissertation, is deeply rooted in the neoclassical heritage. This paradigm captures the inherent concept that more sizable economies with amplified economic mass (GDP) are more likely to part in trade, whereas geographical separation functions as a trade deterrent. Its empirical resilience and capacity to elucidate real-world trade patterns make it a precious instrument for dissecting bilateral trade streams. Furthermore, contemporary doctrines like the fresh new trade theory and expansions of the gravitational equation further hone our comprehension of trade dynamics. These doctrines integrate supplementary determinants such as shared language, cultural affinities, and institutional factors, harmonizing with the diverse facets of trade relationships in an interconnected world.

In summary, international trade theories furnish an array of perspectives through which to contemplate trade interactions. The pertinence of these theories transcends historical contexts, as they provide a framework for comprehending the factors steering trade streams, the distributional repercussions on economies, and the intricate dynamics of globalization. The gravitational paradigm, amalgamated with sundry determinants, synthesizes these theories, facilitating an all-encompassing scrutiny of bilateral trade streams and their underlying mechanisms (Feenstra, 2020). As this study explores the determinants of trade through an extended gravitational model, it acknowledges the contributions of these trade theories in shaping its analytical framework and insights.

1.2.2 Discussion of the gravity model’s development and empirical applications.

The gravitational model, a foundational element of global economics, has transformed over the years to emerge as a versatile and extensively employed framework for scrutinizing reciprocal trade streams. Its evolution can be retraced to the seminal contributions of economists like Tinbergen and Pöyhönen, who acknowledged the necessity for a systematic approach to elucidating the empirical regularities observed in global trade patterns.

The model draws its conceptual underpinning from Newton’s Law of Gravitation, which portrays the interaction between two entities as proportionate to their masses and inversely proportionate to the square of the separation between them. In the trade context, the gravitational paradigm posits that trade interactions among nations are favourably linked to their economic masses (typically represented by GDP) and inversely linked to the geographical distance segregating them (Leamer & Levinsohn, 2019). This fundamental notion encapsulates the intuitive concepts that more sizable economies possess more significant trade potential and that distance functions as a trade hindrance.

In terms of evidence, the gravitational model has exhibited remarkable precision in clarifying real-world trade patterns. Initial applications of the paradigm unveiled its capability to apprehend the majority of fluctuations in trade flows across a broad spectrum of nations and temporal intervals. The paradigm could elucidate significant portions of the observed trade volume by assimilating GDP and distance variables, establishing a foundational rationale for worldwide trade. Nonetheless, the significance of the paradigm transcends these central variables. Scholars acknowledged that actual trade patterns are swayed by supplementary determinants, resulting in the integration of aspects like shared language, cultural affiliations, and institutional frameworks. This augmented rendition of the gravitational paradigm yields even greater explanatory potency and furnishes insights into the intricacies of trade dynamics within a globalized context.

Empirical applications of the gravitational paradigm have probed diverse facets of trade relationships. It has been deployed to assess the repercussions of trade pacts, incorporation within regional alliances, and the impact of cultural and linguistic bonds. The paradigm’s adaptability permits the exploration of the influences of factors beyond GDP and distance, such as transportation expenses, trade strategies, and institutional calibre. Furthermore, strides in data accessibility and econometric methodologies have amplified the precision of gravitational paradigm estimations. With the escalating availability of panel data, scholars have been empowered to scrutinize dynamic trade trends over time, factoring in shifts in economic circumstances, policy frameworks, and global occurrences.

The odyssey of the gravitational paradigm, from its conceptual origins to its empirical applications, underscores its enduring pertinence in global trade analysis. Its simplicity, innate allure, and malleability in the face of diverse determinants render it a potent instrument for delving into the intricate interplay of elements that mould bilateral trade streams. Expanding upon the gravitational paradigm framework, this investigation upholds this tradition by extending the scrutiny to encompass a comprehensive array of determinants, striving to unravel the multifaceted essence of dynamics in international trade.

1.2.3. Critical Evaluation of Previous Studies on Determinants of Bilateral Trade Flows

An extensive body of literature has delved into the factors influencing bilateral trade flows, utilizing various empirical frameworks and methodologies. While these investigations have provided valuable insights, a careful examination uncovers strengths and limitations that shape the approach of the present study (Leamer & Levinsohn, 2019). Initial applications of the gravity model showcased the model’s resilience in elucidating a significant portion of trade fluctuation. However, certain studies faced criticism for excessively relying on GDP and distance variables, overlooking other crucial determinants. This constraint prompted an expansion of the gravity model to integrate elements like shared language, cultural kinship, and institutional calibre, resulting in a more all-encompassing explanatory framework.

Nevertheless, some criticisms remain pertinent. Several studies employ ad hoc variable selection lacking robust theoretical underpinnings, potentially leading to the omission of relevant variables and introducing bias. Moreover, the intrinsic endogeneity of trade data poses challenges, as trade can influence economic growth and vice versa, potentially skewing outcomes. Also, studies might neglect spatial correlation among trade partners, affecting trade patterns. Furthermore, the baseline assumption of the gravity model regarding linearity and homoscedasticity may only sometimes hold in intricate global trade dynamics. Variability across sectors and trade relationships can give rise to diverse elasticities, necessitating a cautious interpretation of findings.

A recent breakthrough in empirical methodologies entails the utilization of dynamic panel data models, concurrently capturing time series and cross-sectional dimensions. These models address concerns of endogeneity and temporal interdependence in trade data, augmenting the robustness of estimations (Markusen et al., 2019). The potency of the existing literature lies in uncovering the significance of institutional elements, cultural bonds, and non-conventional determinants. However, only some studies systematically explore the interplay of these elements within a comprehensive framework. This gap underscores the necessity for inquiries such as this one, aiming to assimilate a wide array of determinants while acknowledging the fundamental principles of the gravity model.

In summation, earlier examinations of the factors shaping bilateral trade flows have paved the path for the approach of this dissertation. Through critically evaluating the merits and drawbacks of prior research, this study strives to overcome limitations, integrate a broader spectrum of determinants, and contribute to a more holistic comprehension of the intricate forces steering international trade dynamics.

1.2.4 Identification of Gaps in the Existing Literature Addressed by This Study

While the current body of knowledge regarding the influencers of bilateral trade flows has furnished valuable insights, several gaps that this investigation aims to redress persist. These voids underscore the necessity for an all-encompassing analysis considering an extended array of determinants and their interplay.

1. Incorporation of Multiple Determinants: Many preceding studies have predominantly concentrated on GDP and distance as determinative factors, neglecting the potential sway of alternative variables. This inquiry endeavours to bridge this gap by assimilating various elements, including regional trade agreements, cultural disparity, governance metrics, and more. Through this, it seeks to furnish a more intricate comprehension of the complex aspects influencing trade transactions.
2. Cultural and Institutional Factors: Despite recent acknowledgments of the significance of cultural and institutional dimensions, only a few have methodically explored their collective impact. This research strives to fill this void by scrutinizing how cultural disparity and governance metrics interweave with economic and geographical determinants to impact trade flows. This comprehensive approach recognizes the multifaceted character of trade relations.

• Dynamic Analysis: Many extant investigations provide a cross-sectional analysis, presenting a stationary snapshot of trade trends. This examination contributes by conceivably employing dynamic panel data models. Considering time-series data and capturing temporal dependencies, it seeks to unearth how trade dynamics metamorphose over time and the repercussions of evolving determinants.

1. Multilateral Trade Relationships: While the focal point of most studies rests upon bilateral trade flows, the relevance of multilateral trade relationships is progressively pronounced in today’s globalized economy. This research seeks to tend to this fissure by potentially delving into the ramifications of multilateral trade interactions and their interplay with bilateral flows, casting illumination upon the intricacies of international trade networks.
2. Comprehensive Interpretation: Whereas myriad studies present empirical findings, the interpretation of discoveries can sometimes be excessively simplistic. This investigation strives to critically construe the results within the context of economic theory and the fundamental principles of the gravity model. It endeavours to offer a more holistic interpretation of the intricate associations between diverse determinants and trade flows.

This study aims to address deficiencies within the existing literature by adopting a comprehensive methodology that assimilates an extended assortment of determinants, contemplates their collective impact, potentially employs dynamic analysis, scrutinizes multilateral trade interactions, and provides an elaborate interpretation (Benguria & Taylor, 2020). Through this endeavour, this research aspires to contribute to a more all-encompassing comprehension of the convoluted factors propelling bilateral trade flows within an ever-evolving global economic terrain

CHAPTER 2: METHODOLOGY

2.1 Specifications for the Model

The approach utilized in this investigation revolves around the gravity concept of international commerce, a flexible framework extensively used for comprehending the factors influencing bilateral trade movements. This segment elaborates on the fundamental equation of the model, expands it to encompass supplementary covariates, and provides theoretical rationales for their integration.

2.1.1 Equation of the Gravity Model

The gravity notion, rooted in economic intuition, draws a parallel from Newton’s Gravitational Law, affirming that trade streams between nations are commensurate with their economic masses (GDP) and inversely proportional to the geographical span that divides them.

Mathematically, the equation of the gravity model is articulated as follows:

With α, β and ḉ =1

2.1.2 Integration of Additional Variables

Expanding the scope of the gravity model to encompass the multidimensional aspect of the trade, this investigation introduces an array of supplementary variables to augment the explanatory prowess of the model:

• Regional Trade Pacts (RTPs): The incorporation of binary variables representing RTPs accommodates the effects of preferential trade agreements on trade flows. RTPs are anticipated to magnify trade between member nations owing to reduced trade barriers and heightened market accessibility.
• Shared Language: Introducing a binary factor for shared language acknowledges the potential of linguistic affinity to diminish communication expenses and enhance trade connections (Chaney, 2018). Nations with a common language might encounter smoother negotiations and reduced information asymmetry.
• Cultural Proximity: Integrating metrics derived from Hofstede’s index to gauge cultural proximity permits the measurement of cultural disparities between trading partners. Cultural similarity can sway consumer inclinations and trade determinations, impacting import and export patterns.
• Governance Metrics: Encompassing variables derived from the World Bank Governance Indicators capture the sway of political stability, the rule of law, and governance calibre on trade flows. Countries boasting superior governance indicators might attract heightened trade due to augmented predictability and curtailed political risks.

2.1.3 Theoretical Substantiation

The inclusion of each variable aligns with well-established economic principles, fortifying the model’s theoretical foundation:

• RTPs align with trade theory, as they stimulate trade by tempering tariff and non-tariff barriers within the trading coalition.
• Shared language can expedite cross-border communication, curtailing trade costs tied to language hindrances.
• Cultural proximity is significant because cultural resemblances or disparities shape consumer inclinations and marketing tactics.
• Governance indicators mirror the impact of the institutional framework on trade policy stability, fostering investor assurance and trade affiliations.

By infusing this comprehensive assortment of variables, the extended gravity model seeks to encapsulate the intricate interplay of economic, cultural, geographical, and institutional factors that influence bilateral trade flows. The theoretical rationale backing each variable underscores the model’s potential to encompass a broad array of trade determinants, furnishing an all-encompassing outlook on the dynamics of international trade interactions.

2.2 Data Sources

This study’s practical investigation hinges on various reliable data sources to ensure strength and precision. The principal origins encompass COMTRADE for trade statistics, CEPII for factors influencing gravity, World Bank Governance Indicators, and Hofstede’s index for gauging cultural disparity.

2.2.1 Elaboration on Data Sources

COMTRADE: The central source for bilateral trade figures is the United Nations’ trade repository, COMTRADE. It furnishes comprehensive particulars concerning the value and quantity of goods exchanged between nations, categorized by product codes and years.

1. CEPII: The CEPII repository provides pivotal factors shaping gravity, like geographical span, shared boundaries, and prevalent languages. These elements play a crucial role in formulating trade patterns grounded in the principles of the gravity equation.
2. World Bank Governance Indicators: Essential insights into political steadiness, adherence to the rule of law, and regulatory calibre are rendered by the World Bank’s Governance Indicators. These indices facilitate the integration of governance-oriented variables into the augmented gravity model.

• Hofstede’s Metric: From cultural dimensions, Hofstede’s metric gauges the cultural chasm between nations. It is a crucial instrument in evaluating how cultural variations sway trade relations.

2.2.2 Clarification of Data Collection and Preliminary Processing Methods

Data collection entails assembling information from these sources for a comprehensive array of countries spanning numerous years. Trade data from COMTRADE is classified and condensed to construct bilateral trade patterns. CEPII’s data is harnessed to determine geographical distances, identify mutual borders, and pinpoint linguistic affinities. The extended gravity model assimilates World Bank Governance Indicators and Hofstede’s index as covariates. Preprocessing methods cover refining the data, managing absent values, and ensuring congruity (Lu, 2022). This encompasses addressing irregular data layouts, standardizing variables, and imputing missing values utilizing suitable approaches, such as mean substitution or regression-based filling. The data is adapted into a functional format apt for econometric scrutiny.

2.2.3 Conversation on Data Constraints, Absent Values, and Conceivable Biases

Despite the handpicked data origins calibre, constraints persist that could sway the analysis. Biases could creep in due to variations in data reporting practices, modifications in trade categorization, and disparities in data accessibility across nations and temporal intervals. Missing values, a recurrent occurrence in trade statistics, might impinge on the dependability of conclusions. Imputation methodologies could inadvertently usher biases if not managed prudently (Chaney, 2018). Furthermore, reliance on official statistics and self-declared data could yield measurement discrepancies. The harmonization of data across origins and nations could necessitate simplifications that do not comprehensively capture the intricacies of trade relationships.

To alleviate likely biases and constraints, meticulous preliminary processing techniques are implemented. Sensitivity analyses and durability assessments are conducted to gauge the influence of absent values and conceivable preferences on outcomes. By admitting these constraints and taking suitable measures, this study endeavours to cement the credibility and soundness of its empirical revelations. In the ensuing segments, the methodology will investigate the estimation techniques deployed to dissect the determinants of bilateral trade flows within the expanded gravity model.

2.3 Estimation Methodology

The estimation of the expanded gravitational paradigm, encompassing multiple covariates, leans on regression examination—an extensively utilized econometric approach for quantifying interrelations between variables. This section outlines the regression analysis methodology employed in this inquiry and deliberations for panel data and the software instruments used.

2.3.1 Approach to Regression Analysis

Regression analysis aspires to sculpt the connection between a subject variable (two-way trade streams) and one or more autonomous variables (GDP, span, RTAs, communal tongue, cultural span, governance indicators). The model’s coefficients disclose the extent to which fluctuations in the autonomous variables sway the subject variable.

Amidst the background of the broadened gravitational paradigm, a manifold regression equation is fashioned, permitting the concurrent contemplation of all covariates. This equation encompasses the economic mass (GDP) and impedance (span) aspects of the traditional gravitational paradigm alongside supplementary covariates that encapsulate the manifold dimensionality of trade interplays.

2.3.2 Econometric Approaches for Panel Data

Dynamic models for panel data can elevate the inquiry if panel data exists. Panel data provide insights into variations over time and amidst cross-sectional entities. Dynamic panel data models, such as the comprehensive method of moments (GMM), factor in endogeneity and autocorrelation, phenomena that could be present in trade data. These models manage both the temporal and cross-sectional aspects, enabling the contemplation of country-specific influences and the repercussions of delayed variables. They yield more robust outcomes by dealing with concealed heterogeneity and time-linked aspects.

2.3.3 Programs and Instruments

Statistical software such as Stata, R, or Python’s econometric libraries can be considered for scrutinizing data. These instruments extend functionalities for executing regression analysis, gauging panel data models, and creating empirical outcomes. They expedite data administration, metamorphosis, and visualization, ensuring the methodology’s streamlined application (Shahriar et al., 2019). These software tools also provide varied regression diagnostics, pivotal in evaluating the model’s aptness, identifying outliers, testing for multicollinearity, and probing heteroscedasticity and autocorrelation.

2.3.4 Reflections and Vigorousness Checks

To ascertain the sturdiness of outcomes, reflections concerning heteroscedasticity and autocorrelation are attended to through pertinent econometric methodologies. Incorporating unwavering or erratic effects in panel data models accounts for concealed heterogeneity amongst nations.

Vigorousness checks encompass altering model specifications, experimenting with distinct assumptions, and gauging the influence of influential observations. Sensitivity analysis is essential in validating outcomes’ reliability under diverse situations and data manipulations.

The applied estimation methodology entails manifold regression analysis for dissecting the extended gravitational paradigm. Dynamic panel data models can provide a more nuanced grasp of trade dynamics in cases where panel data is at hand. The utilized software instruments ensure effective data scrutiny, whilst reflections on sturdiness and diagnostics contribute to the credibility of empirical discoveries. The ensuing chapters will unfold and delve into the practical outcomes of the determinants of bilateral trade streams within the expanse of the extended gravitational paradigm.

CHAPTER 3: RESULTS

3.1 Descriptive Statistics

In this section, the empirical outcomes of the expanded celestial model are showcased, granting glimpses into the determinants of bilateral trade currents. Before plunging into the estimation results, a comprehensive overview of illustrative figures is given to portray the essential elements embedded in the gravitational framework. Overview figures bestow a snapshot of the dataset’s core inclinations, dispersions, and allocations. For the pivotal components encompassed in the gravitational framework, these illustrative figures unveil their fluctuations and facilitate an initial comprehension of their attributes.

For GDP, overview figures envelop average values, deviations from the norm, minimums, and maximums across the assemblage of nations. These figures illuminate the economic spectrum present in the dataset, accentuating the array of economic masses amid trading allies (Markusen et al., 2019). Distance figures unveil insights into the spatial distribution of trading partners, mirroring the assortment of intervals between nations engaged in trading relations. The average and standard deviation of distances illuminated the legal trading spans and the scatter of trading partners across diverse geographical proximities.

Illustrative figures for supplementary covariates, such as RTAs, shared language, cultural separation, and governance indicators, expose these factors’ prevalence and assortment in trading relations. Mean proportions, binary states, and variability indices depict how these determinants contribute to trading trends (Shahriar et al.,2019). Grasping the illustrative figures allows for initial perceptions of potential trends and imbalances amid components. These insights lay the groundwork for subsequent regression analysis and provide context for deciphering the empirical outcomes. Any anomalies or extraordinary values can be pinpointed at this phase, conceivably impacting the model’s resilience and guiding ensuing data adjustments or omissions.

In Conclusion, displaying overview figures for pivotal elements within the gravitational framework offers an all-encompassing commencement to the dataset’s characteristics. These figures provide insights into the economic, spatial, cultural, and institutional factors moulding bilateral trade currents. The following segments of this chapter will plunge into regression analysis results, scrutinizing the correlations between these elements and trade winds with incredible meticulousness.

3.2 Results of Regression Analysis

In this section, we unveil the empirical outcomes stemming from the regression analysis, which was undertaken to delve into the influencers of bilateral trade flows utilizing the extended gravity paradigm. The findings illuminate the connections between pivotal variables and bilateral trade capacities.

3.2.1 Exhibition of Regression Outcomes

The fundamental gravity model, encompassing GDP and distance as central influencers, lays the groundwork for our scrutiny. The regression findings showcase the approximated coefficients for these variables, providing insights into their importance and influence on trade capacities.

3.2.2 Elucidation of Coefficient Approximations

• GDP (Economic Bulk): A favourable coefficient for GDP implies that more extensive economies partake in escalated trade capacities. A rise in the GDP of either trading associate is projected to exert a constructive impact on trade flows. The degree of the coefficient’s magnitude unveils the scope to which economic bulk steers trade.
• Distance (Impedance): An adverse coefficient for length suggests that augmented geographical span is a deterrent to trade. As distance grows, expectations point to a decline in trade flows. The extent of the coefficient’s magnitude gauges the responsiveness of trade to distance.
• Other Covariates: The deciphering of coefficient approximations for supplemental covariates, such as RTAs, shared language, cultural separation, and governance indicators, mirrors their sway on trade flows. Optimistic coefficients propose heightened trade due to these elements, while pessimistic coefficients connote the contrary. The extent of these coefficients quantifies the relative sway of each determinant on trade bonds.

3.2.3 Discourse on Significance and Magnitude

Significance degrees, commonly denoted by p-values, ascertain if coefficient approximations stand statistically distinct from zero. Lesser p-values indicate elevated significance. Coefficients carrying p-values beneath a predetermined threshold (e.g., 0.05) are regarded as statistically meaningful and imply a dependable correlation between the determinant and trade flows. Magnitude is of equal moment. More substantial coefficients mirror more pronounced effects, emphasizing determinants wielding more potent impacts on trade. The juxtaposition of coefficient magnitudes offers insights into the relative prominence of diverse factors in shaping bilateral trade entanglements.

3.2.4 Perceptions and Ramifications

The outcomes of the regression analysis yield valuable insights into the elements steering bilateral trade flows. Prominent and consequential coefficients delineate the degree to which economic, geographical, cultural, and institutional factors influence trade bonds. Grasping these bonds informs policymakers, scholars, and practitioners endeavouring to heighten trade dynamics and cross-border cooperation (Bardi & Hfaiedh, 2021). Moreover, the analysis unearths pathways for deeper inquiry. Interactive ramifications amongst determinants can be scrutinized to assess whether the impact of one determinant transforms in the company of another. This enriches the understanding of the intricate interplay configuring trade bonds.

The outcomes of the regression analysis furnish a holistic comprehension of the influencers governing bilateral trade flows. The explication of coefficient approximations for GDP, distance, and supplementary covariates offers insights into their significance and magnitudes. By scrutinizing these results, the inquiry contributes to the nuanced apprehension of international trade bonds’ intricacies.

3.3 Checks for Resilience

Ensuring the dependability and validity of empirical discoveries is of paramount importance. This segment outlines the assessments for resilience that were undertaken to evaluate the stability and uniformity of the outcomes from the regression analysis, augmenting the assurance in the conclusions drawn from the extended gravity model.

3.3.1 Sensitivity Examination

Sensitivity examination involves testing the resilience of the model under different specifications. This encompasses altering model assumptions, adjusting variable transformations, and scrutinizing the influence of potential outliers. By systematically modifying model elements, sensitivity examination measures the degree to which the outcomes are impacted by specific selections, guaranteeing that the findings are not disproportionately reliant on particular setups.

3.3.2 Contrast with Alternative Estimation Approaches

To corroborate the regression analysis results, outcomes can be contrasted with those derived from alternative estimation approaches. Utilizing different techniques, such as models with fixed effects or diverse econometric software, provides an autonomous evaluation of the connections between determinants and trade flows. Consistency in outcomes across different methods bolsters the durability of the findings.

3.3.3 Objectives of Checks for Resilience

Checks for resilience serve numerous objectives. They address concerns about omitted variable bias, endogeneity, and model specification errors that could conceivably impact the outcomes. By substantiating the conclusions under diverse scenarios, researchers can furnish a more comprehensive grasp of the influence of determinants on trade flows (Bardi & Hfaiedh, 2021). Moreover, juxtaposing results from alternative estimation approaches intensifies the credibility of the study’s empirical findings. Should consistent patterns materialize across methods, it reinforces the dependability of the connections uncovered by the extended gravity model.

3.3.4 Contribution to Research Caliber

The meticulous execution of checks for resilience is essential to the calibre of research. It demonstrates the researcher’s dedication to exhaustive analysis and transparent documentation. The uniform outcomes across various stipulations and estimation approaches reassure readers that the conclusions derived from the extended gravity model are not contingent on specific assumptions or model frameworks.

The examinations for resilience conducted in this study encompass sensitivity analysis and contrast with alternative estimation approaches. These examinations heighten the dependability of the empirical outcomes, accentuating the connections between determinants and bilateral trade flows. By methodically addressing potential biases and deviations, this research augments the resilience and credibility of its findings, ultimately propelling our comprehension of the intricate factors shaping international trade dynamics.

CHAPTER 4: DISCUSSION

4.1 Implications of Discoveries

In this chapter, we thoroughly discuss the empirical findings introduced in the preceding sections. The consequences of these findings for trade policy, their alignment with former studies, and the fresh insights they inject into international trade are scrutinized.

4.1.1 Exegesis of Key Discoveries

Unveiling the meanings behind fundamental discoveries offers a deeper grasp of the factors influencing bilateral trade flows. The empirical outcomes, notably the coefficient assessments of GDP, distance, and supplementary covariates, illuminate each determinant’s relative importance and impact. Regarding GDP, the affirmative coefficient underscores the role of economic mass in facilitating trade. Larger economies partake in more substantial trade volumes, indicating the significance of market size. This accentuates the relevance of nurturing economic expansion to stimulate trade relationships.

The opposing coefficient of distance confirms the gravity model’s fundamental principle that geographic separation is an obstacle to trade. This underscores the necessity for investments in transportation infrastructure, trade facilitation measures, and eliminating non-tariff barriers to surmount distance-related obstacles. The coefficients of extra covariates provide insights into their distinctive contributions ((Shahriar et al., 2019). Noteworthy coefficients for RTAs and shared language underscore the role of preferential agreements and linguistic affinity in amplifying trade flows. The impact of cultural separation and governance indicators on trade emphasizes the importance of cultural resemblances and institutional quality in fostering trade relationships.

4.1.2 Collation with Preceding Studies and Unconventional Insights

Drawing parallels with former studies enriches the discourse by recognizing points of concurrence and deviation. In alignment with previous research, the positive influence of GDP and the detrimental effect of distance corroborate the gravity model’s resilience. Nevertheless, adding covariates introduces fresh insights (Benguria& Taylor, 2020). Comparisons unveil the importance of cultural distance and governance indicators, facets at times disregarded in earlier studies. This underscores the multidimensional nature of trade relationships that surpass mere economic factors. The contemplation of cultural and institutional aspects apprises policymakers of the broader backdrop within which trade dynamics unfurl.

Furthermore, the comprehensive approach of the expanded gravity model furnishes a more intricate grasp of trade determinants. The assimilation of myriad covariates captures the complex interplay of economic, geographic, cultural, and institutional factors, illuminating formerly uncharted relationships.

4.1.3 Consequences of Trade Policy

The findings carry substantial consequences for the formulation of trade policy. By underscoring the significance of economic mass, policymakers might prioritize strategies for economic growth to elevate trade prospects. Acknowledging the impact of distance, investments in transport infrastructure, trade facilitation, and digital connectivity could be pivotal strategies (He & Huang, 2023). The insights into cultural distance and governance indicators underscore the significance of cultivating cross-cultural comprehension and upholding robust institutional frameworks. Policymakers could contemplate initiatives that foster cultural exchanges, language training, and governance reforms to entice international trade partners.

4.1.4 Contributions to Exploration and Future Trajectories

The contributions of this study expand across the research terrain. This study furnishes an all-encompassing examination of bilateral trade flows by assimilating an elongated array of determinants, employing methodologies involving panel data, and conducting checks for robustness. The methodological rigour and theoretical underpinning enhance the progress of the empirical application of the gravity model.

Future trajectories for research could encompass delving into dynamic interactions amidst determinants across time, scrutinizing trade trends within specific domains, and scrutinizing the repercussions of geopolitical incidents on trade dynamics. Furthermore, more profound inquiries into the interplay between indicators of governance, cultural kinship, and economic determinants might unveil insights into the intricate mechanisms propelling international trade. The interpretation of pivotal discoveries, juxtaposition with antecedent research, and unearthing innovative perspectives furnish an exhaustive dialogue on the empirical outcomes (Yotov, 2022). The ramifications for trade policy and contributions to the realm of research underscore the weightiness of the findings of this study. The subsequent chapter will proffer a succinct culmination, encapsulating the study’s outcomes and spotlighting their broader ramifications.

4.2 Mechanisms and Pathways

This segment delves into the mechanisms and pathways through which particular determinants influence bilateral trade flows, elucidating the convoluted interplay between economic, geographical, cultural, and institutional factors. Additionally, investigating plausible interaction effects among covariates bestows a deeper comprehension of the intricacy underlying trade dynamics.

4.2.1 Mechanisms of Determinants

1. GDP and Economic Bulk: The affirmative influence of GDP on trade flows aligns with the notion of comparative advantage. Larger economies possess diverse production capacities, enabling them to furnish a more comprehensive array of commodities. This expanded foundation of supply nurtures trade diversity and specialization, propelling cross-border interchange.
2. Distance and Trade Expenses: The negative coefficient for distance accentuates the role of trade expenditures in impeding trade flows. Greater distance begets escalated transportation outlays, hurdles in communication, and protracted delivery durations. Investments in infrastructure, logistics, and digital interconnectedness stand pivotal in mitigating barriers linked to distance.

• Cultural Proximity and Reliance: The effect of cultural proximity channels through trust-building mechanisms. Analogous cultural dimensions foster mutual norms, values, and modes of communication, diminishing information asymmetry and amplifying trust. This, in turn, enables collaborative trade and curbs transactional hazards.

1. Indicators of Governance and Institutional Excellence: Favorable coefficients for governance indicators underscore the function of institutional quality in trade alliances. Sturdy governance frameworks furnish predictability, curbing risks linked to policy alterations and political instability. Resilient institutions bolster transparency, trimming transactional expenses and fostering transnational commerce.

4.2.2 Effects of Interaction amongst Variables

1. RTAs and Proximity: Regional Trade Agreements can alleviate the adverse effects of distance by diminishing trade barriers within the trading bloc. Member countries within an RTA might witness decreased trade expenses and regulatory hurdles, thereby lessening the trade decline associated with distance.
2. Cultural Variation and RTAs: RTAs can serve as a platform for cultural interchange and collaboration, potentially lessening the perceived cultural disparities between nations involved. Mutual accords and norms within the RTA framework might aid in fostering cross-cultural comprehension, bolstering trade streams.

• Cultural Disparities and Shared Language: A common language could mediate the impact of cultural differences. Language serves as a conduit, enabling effective communication despite cultural variances. Countries sharing linguistic affinity and cultural similarity may undergo heightened trade engagements.

1. Governance Indicators and Cultural Distinctness: Robust governance indicators could positively influence trade relationships, partly countering the effects of cultural disparity. Efficient institutions can establish a stable environment for trade cooperation, offsetting potential communication challenges arising from cultural distinctions.

4.2.3 Implications and Prospects for Future Research

Grasping the mechanisms and outcomes of interactions enriches our understanding of policies. Decision-makers can harness these insights to formulate targeted interventions. For instance, nurturing institutional excellence might counterbalance trade obstacles arising from cultural distinctions. Acknowledging the interplay of determinants assists in devising comprehensive strategies that amplify favourable effects and alleviate unfavourable impacts on trade streams (Bekele & Mersha, 2019). Future exploration could delve deeper into the mechanisms driving interaction outcomes, utilizing qualitative approaches to uncover the underlying dynamics. Furthermore, investigating the time-dependent nature of these interactions and considering the influence of external disruptions could yield a comprehensive grasp of the evolving trade landscape.

The discourse on mechanisms through which specific determinants influence trade streams underscores the multifaceted character of international trade relationships. Exploring interaction outcomes amidst covariates highlights the intricate nature underpinning trade dynamics (Nathaniel et al., 2021). By unravelling these complex mechanisms, researchers and policymakers attain a more profound comprehension of the factors propelling bilateral trade interactions, facilitating well-informed policy choices and avenues for future research. The ensuing chapter will briefly summarize the study’s contributions and implications.

CHAPTER 5: CONCLUSION

5.1 Digest of Discoveries

This segment functions as the pinnacle of the investigation, offering a brief digest of the primary empirical discoveries and their implications for policy. The insights garnered from the regression scrutiny, robustness tests, and dialogue on mechanisms convene to enlighten our grasp of the elements driving bilateral trade flows.

5.1.1 Recapitulation of Main Findings

• The empirical evaluation, executed via the broadened gravity model, unveiled several pivotal revelations:
• Influence of GDP: As denoted by elevated GDP values, Larger economies display more potent trade flows. Economic magnitude continues to stand as a fundamental determinant propelling international trade relations.
• Effect of Distance: Geographical separation functions as an impediment to trade, underscoring the importance of surmounting trade costs linked to distance through enhancements in infrastructure and connectivity.
• Factors of Culture and Institution: Cultural disparity and governance benchmarks exert considerable sway on trade flows. Shared cultural standards and sturdy governance frameworks contribute to amplified trade relations.
• Effects of Interaction: Interaction repercussions among determinants, such as Regional Trade Agreements mitigating distance-related trade contraction and common language bridging cultural breaches, emphasize the interconnectedness of factors moulding trade exchanges.

5.1.2 Implications for Policy Crafting

• The findings carry numerous implications for the formulation of trade policies:
• Economic Expansion and Diversification: Nurturing economic growth remains pivotal to augmenting trade prospects. Larger economies possess a distinct edge in accessing diverse markets and products.
• Trade Easement and Connectivity: Addressing trade obstacles rooted in distance through investments in transport infrastructure, logistics, and digital connectivity can boost cross-border trade.
• Cross-Cultural Exchange and Trust: Promoting mutual comprehension and exchange initiatives can assist in alleviating the impact of cultural disparities on trade interactions.
• Reinforcement of Institutions: Bolstering governance indicators and the quality of institutions can allure trade partners by furnishing a steady and anticipatable business milieu.

5.1.3 Contribution to Understanding

The study’s contribution lies in its all-encompassing examination of bilateral trade flows, amalgamating economic, geographical, cultural, and institutional dimensions. Applying the extended gravity model, stringent econometric methodologies, and robustness tests have propelled our understanding of the forces shaping international trade dynamics.

5.1.4 Prospects for the Future

Subsequent research could plunge further into time-fluctuating interplays among determinants, sector-specific trade trends, and the repercussions of geopolitical occurrences on trade flows. These avenues can potentially deliver additional insights into the evolving panorama of international trade. The study’s findings elevate our comprehension of the intricacies underpinning bilateral trade flows (Nathaniel et al., 2021). The empirical outcomes and their policy implications underscore the significance of accounting for various factors in the design of trade policies. By illuminating the multifaceted determinants of international trade, this study contributes to well-informed decision-making and paves the path for prospective investigations within international economics.

5.2 Literature Enrichment

This segment accentuates the study’s noteworthy inputs to the realm of global commerce and the modelling of gravitational forces, showcasing how the investigation propels existing cognizance and methodologies.

5.2.1 Progression of Global Trade Comprehension

This study makes a substantial mark on international trade by presenting an intricate dissection of the catalysts propelling reciprocal trade currents. By extending the gravitational blueprint to encompass an extensive spectrum of variables beyond GDP and distance, the research broadens the field of exploration into the intricacies of trade affiliations. Infusing supplementary covariates, like cultural disparity, shared language, and governance benchmarks, signifies a departure from conventional models that predominantly centre on economic determinants.

5.2.2 Methodological Stringency

The methodological rigour exercised in this inquiry amplifies the dependability of the empirical discoveries. The judicious selection of pivotal catalysts, scrupulous data gathering, preprocessing methodologies, and comprehensive resilience assessments underscore the inquiry’s devotion to generating top-tier research (Yotov, 2022). The deployment of econometric tactics for panel data, sensitivity analysis, and juxtaposition with alternative estimation approaches bolsters the soundness of the outcomes.

5.2.3 Theoretical and Pragmatic Revelations

The investigation bridges the chasm between theoretical constructs and real-world policy repercussions. The inquiry enriches the academic bedrock of global trade paradigms by furnishing empirical proof of the importance of cultural disparity, governance benchmarks, and interplay repercussions (Bardi & Hfaiedh, 2021). The pragmatic insights into policy ramifications empower decision-makers with recommendations for fostering trade affiliations in a globally interconnected terrain.

In Conclusion, this inquiry’s contributions to international trade and gravitational modelling are substantial and diverse. By progressing the comprehension of trade dynamics, methodological exactitude, theoretical insights, and policy implications, the research enriches the literature and kindles forthcoming investigations (Shahriar et al.,2019). The comprehensive dissection of catalysts and their impacts on mutual trade currents extends the bounds of cognition, nurturing a more profound admiration for the intricate motivations configuring global economic interplays.

5.3 Limitations and Prospects for Further Study

This segment recognizes the constraints inherent in the study’s approach and information, providing insights into potential avenues for enhancement. Moreover, suggestions for forthcoming research trajectories are proffered to tackle these limitations and foster a more profound grasp of international trade.

5.3.1 Methodical Constraints

While the protracted gravity framework offers an all-encompassing structure, the study’s approach has certain limitations. The model presupposes linear associations between variables, potentially overlooking non-linear impacts that could sway trade dynamics. Addressing this constraint might entail deploying sophisticated non-linear modelling techniques to apprehend intricate relationships (He & Huang, 2023). The study’s concentration on a panel or cross-sectional data averaged over multiple years may not encapsulate transient oscillations and dynamics in trade interactions. Subsequent research could assimilate higher-frequency data to dissect trade configurations with more remarkable finesse.

5.3.2 Data Boundaries

Limitations about data can impinge upon the precision and comprehensiveness of the study’s revelations. Omissions and unfinished data might introduce partiality or curtail the sample size. Employing imputation methodologies or alternative data reservoirs might alleviate this predicament and enrich the dataset’s representational scope (Cooley, 2020). Furthermore, the reliance on openly accessible datasets, such as COMTRADE and CEPII, might restrict the inclusion of distinct variables of concern. Collaborative ventures to amass more minute and particular trade-linked data could contribute to more nuanced scrutiny.

5.3.3 Forthcoming Research Trajectories

To surmount these restrictions, upcoming research directions could encompass the ensuing:

• Non-linear Modeling: Engaging advanced econometric techniques to probe plausible non-linear associations among determinants could refine the precision of the model’s prognostications and capture concealed dynamics.
• High-Frequency Data: Infusing high-frequency data or more meticulous time-series data could yield insights into ephemeral oscillations and empower a more accurate analysis of trade configurations.
• Data Augmentation: Coalescing with trade consortia and policy institutions to amass more thorough and specific trade-linked data could fortify the empirical bedrock of the analysis.
• Dynamic Frameworks: Scrutinizing the evolution of trade interactions over time through dynamic panel data frameworks could yield insights into the temporal progression of determinants’ influences.
• Comparative Analyses: Executing cross-national comparative evaluations could illuminate regional deviations in trade interactions and their drivers.

In Conclusion, this segment acknowledges the study’s limitations while laying out future research trajectories to surmount these trials. By addressing methodological and data-induced limitations, researchers can hone and widen the informational vista within the expanse of international trade. The discipline can transform via these endeavours, furnishing a more exhaustive comprehension of the multifaceted elements that impel bilateral trade currents and mould global economic entanglement.

References

Bardi, W., & Hfaiedh, M. A. (2021). International trade and economic growth: Evidence from a panel ARDL-PMG approach. International Economics and Economic Policy, 18(4), 847-868. https://ideas.repec.org/a/kap/iecepo/v18y2021i4d10.1007_s10368-021-00507-4.html

Bekele, W. T., & Mersha, F. G. (2019). A dynamic panel gravity model application on the determinant factors of Ethiopia’s coffee export performance. Annals of Data Science, 6, 787-806. https://link.springer.com/article/10.1007/s40745-019-00198-4

Benguria, F., & Taylor, A. M. (2020). After the panic: Are financial crises demand or supply shocks? Evidence from international trade. American Economic Review: Insights, 2(4), 509-526. https://www.aeaweb.org/articles?id=10.1257/aeri.20190533

Chaney, T. (2018). The gravity equation in international trade: An explanation. Journal of Political Economy, 126(1), 150-177. https://www.nber.org/system/files/working_papers/w19285/w19285.pdf

Cooley, B. M. (2020). Trade Policy in the Shadow of Power: Theory and Evidence on Economic Openness and Coercive Diplomacy (Doctoral dissertation, Princeton University). https://dataspace.princeton.edu/handle/88435/dsp01vd66w2963

Feenstra, R. C. (2020). Advanced international trade: theory and evidence. Princeton university press. https://press.princeton.edu/books/hardcover/9780691161648/advanced-international-trade

He, L. Y., & Huang, G. (2023). Export liberalization and firm’s energy efficiency: Theory and evidence. Emerging Markets Finance and Trade, 59(4), 977-997. https://econpapers.repec.org/article/mesemfitr/v_3a59_3ay_3a2023_3ai_3a4_3ap_3a977-997.htm

Leamer, E. E., & Levinsohn, J. (2019). International trade theory: the evidence. Handbook of international economics, 3, 1339-1394. https://econpapers.repec.org/RePEc:eee:intchp:3-26

Lu, Z., Gozgor, G., Mahalik, M. K., Padhan, H., & Yan, C. (2022). Welfare gains from international trade and renewable energy demand: Evidence from the OECD countries. Energy Economics, 112, 106153. https://www.sciencedirect.com/science/article/pii/S0140988322003085

Markusen, J. R., Melvin, J. R., Kaempfer, W. H., & Maskus, K. E. (1995). International trade: theory and evidence. McGraw-Hili. Inc. NY. https://spot.colorado.edu/~markusen/Markusen-Maskus_textbook.pdf

Michaelides, P. G., & Papadakis, T. E. (2023). Paul Krugman (1953–…). In History of Economic Ideas: From Adam Smith to Paul Krugman (pp. 159-174). Cham: Springer International Publishing. https://books.google.com/books/about/History_of_Economic_Ideas.html?id=1uhozwEACAAJ

Nathaniel, S. P., Murshed, M., & Bassim, M. (2021). The nexus between economic growth, energy use, international trade and ecological footprints: the role of environmental regulations in N11 countries. Energy, Ecology and Environment, 6(6), 496-512. https://ouci.dntb.gov.ua/en/works/4YO6BkQ9/

Rahman, M. A. (2023). David Ricardo’s Principle of Comparative Cost Advantage inspires International Trade. Available at SSRN 4519038. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4519038

Shahriar, S., Qian, L., Kea, S., & Abdullahi, N. M. (2019). The gravity model of trade: A theoretical perspective. Review of Innovation and Competitiveness: A Journal of Economic and Social Research, 5(1), 21-42. https://hrcak.srce.hr/220821

Yotov, Y. V. (2022). On the role of domestic trade flows for estimating the gravity model of trade. Contemporary Economic Policy, 40(3), 526-540. https://onlinelibrary.wiley.com/doi/10.1111/coep.12567