Open AccessGravity Model for Trade between Singapore and Malaysia using Employment
Author(s) -
Yang Qi,
Soon-Beng Chew
Publication year - 2020
Publication title -
journal of business theory and practice
Language(s) - English
Resource type - Journals
eISSN - 2372-9759
pISSN - 2329-2644
DOI - 10.22158/jbtp.v8n3p107
Subject(s) - gravity model of trade , operationalization , economics , volume (thermodynamics) , real gross domestic product , bilateral trade , international economics , econometrics , geography , philosophy , physics , archaeology , epistemology , quantum mechanics , china
This paper uses GDP and employment data based on the Gravity Model to account for the trade volume between Singapore and Malaysia. There are two ways to operationalize this gravity model. One is based on GDP which is the current practice in the literature. But in this paper, we also use employment data. It is found that, to account for trade volume between Singapore and Malaysia, employment data performs better than the GDP data. Employment performs better than GDP because GDP is the result of trade but employment is an input to create trade volume.