Does gravity matter? Evidence from Nepal’s trade pattern

Bibliographic Data

ID13010484
AuthorsJinhwan Oh (0000-0002-0861-6139, Ewha Womans University, corresponding author), Laxmi Prasad Prasai (International University of Japan)
Year2012
Volume15
Issue2
Pages161-175
Publication date2012-06-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueInternational Area Studies Review (JOURNAL)
Journal identifiersISSN: 2049-1123 • E-ISSN: 2233-8659
PublisherSAGE Publishing (PUBLISHER • US)
DOI10.1177/2233865912447086
OpenAlexW2013654596
LanguageEN
Citations received1
References cited7

In the midst of globalization, trade of goods and services has been increasingly important. As a World Trade Organization member, Nepal is no exception. Using the gravity model, this study examines Nepal’s trade pattern by analysing a panel dataset of the country’s bilateral trade flows with 94 countries for 29 years (1981–2009). The empirical results for the entire dataset followed the general prediction of the gravity model (positive coefficients for economic size and negative coefficients for distance). When the data was examined by dividing it into two based on Nepal’s economic liberalization in 1991, no significant structural breaks were found. However, when the dataset was re-examined by comparing the actual trade flows with the estimated ones, it was found that Nepal’s trade flows with China, Japan and ASEAN members were undermined, whereas its trade with India was excessively concentrated. It is therefore suggested that Nepal diversify its trading activities and reduce its trade dependency on India

Bilateral trade · China · Econometrics · Economic integration · Economics · Economy · Free trade · Geography · Globalization · Goods and services · Gravity model of trade · International economics · International free trade agreement · International trade · Liberalization · Panel data · Trade barrier · Global Trade and Competitiveness · Global trade and economics · International Business and FDI

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