Australia's global trade potential: evidence from the gravity model analysis

Rahman, Mohammad Mafizur (2009) Australia's global trade potential: evidence from the gravity model analysis. In: 2009 Oxford Business and Economics Conference , 24-26 Jun 2009, Oxford, United Kingdom.

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Abstract

This paper attempts to investigate trade potential for Australia using the augmented gravity models and cross section data of 50 countries. OLS has been used as an estimation technique for 2001 and 2005 data. The estimated coefficients from the gravity models are then used to predict Australia's trade potential. Theoretical justification for using the gravity model to analyse bilateral trade flows is also re-affirmed. Our results reveal that Australia's bilateral trade is affected positively by economic size, per capita GDP, openness and common language, and negatively by the distance between the trading partners. The estimated results also show that Australia has tremendous trade potential with Singapore, Argentina, the Russian Federation, Portugal, Greece, Chile, the Philippines, Norway, Brazil and Bangladesh. Against the backdrop of Australia's historic trade deficit and lower and unimpressive share in the world trade, this study is crucial and will play a contributory role for the policy makers in particular and for the economies of Australia and its trading partners in general.


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Item Type: Conference or Workshop Item (Commonwealth Reporting Category E) (Paper)
Refereed: Yes
Item Status: Live Archive
Additional Information: No evidence of copyright restrictions on web site.
Depositing User: Dr Mafiz Rahman
Faculty / Department / School: Historic - Faculty of Business - School of Accounting, Economics and Finance
Date Deposited: 29 Oct 2009 03:13
Last Modified: 18 Nov 2011 03:52
Uncontrolled Keywords: gravity model; cross-section data; Australia; trade potential
Fields of Research (FOR2008): 14 Economics > 1402 Applied Economics > 140210 International Economics and International Finance
14 Economics > 1403 Econometrics > 140301 Cross-Sectional Analysis
14 Economics > 1402 Applied Economics > 140212 Macroeconomics (incl. Monetary and Fiscal Theory)
Socio-Economic Objective (SEO2008): B Economic Development > 91 Economic Framework > 9103 International Trade > 910303 Trade Policy
URI: http://eprints.usq.edu.au/id/eprint/5537

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