Open AccessDETERMINANTS OF THE BILATERAL TRADE FLOWS OF NORTH MACEDONIA– A GRAVITY MODEL APPROACH
Author(s) -
Irena Kikerkova,
Elena Makrevska Disoska,
Katerina Toshevska-Trpchevska,
Jasna Tonovska
Publication year - 2021
Publication title -
diem
Language(s) - English
Resource type - Journals
eISSN - 1849-3645
pISSN - 1849-3653
DOI - 10.17818/diem/2021/1.10
Subject(s) - gravity model of trade , bilateral trade , per capita , european union , population , international economics , international trade , economics , macedonian , geographical distance , international free trade agreement , trade barrier , demographic economics , geography , demography , china , linguistics , philosophy , archaeology , sociology
The paper makes an indetail overview of the structure of the trade exchange of goods of Macedonia and explores the determinants of its bilateral trade flows using the gravity model. The analysis includes data on 40 trade partners of Macedonia in the period from 2005-2019. The used variables in the model are: GDP per capita difference, population, distance and relative endowments of factors of production (capital, land and labour). In most of the analyzed regressions the coefficients on determinants such as GDP per capita difference and population are positive and their impact upon the bilateral trade (as dependent variable) is statistically significant. Intensity of Macedonian trade decreases in regard of the distance from a trade partner and increases in partner’s size – the country tends to trade more with lager countries. In our analysis we included three dummy variables such as: membership in the EU and in CEFTA-2006 and common language. The impact of the possible membership in the EU is clearly positive and statistically significant. Being a candidate country for full EU membership, Macedonia trades more with EU trade partners rather than with the neibouring countries, members of CEFTA-2006. Keywords: bilateral trade, gravity model, trade partners, Republic of North Macedonia, European Union, CEFTA-2006