The study of trade flows based on the trade gravity model - the case of Albania Cover Image

Studimi i flukseve tregtare mbi bazën e modelit të gravitetit tregtar – rasti i Shqipërisë
The study of trade flows based on the trade gravity model - the case of Albania

Author(s): Engjell Pere, Godiva Rëmbeci, Arianit Shkurti
Subject(s): National Economy, International relations/trade, Financial Markets, Socio-Economic Research
Published by: Shtëpia botuese “UET Press”
Keywords: Gravity model; international trade; comparative advantages;

Summary/Abstract: The principle idea of this paper is to analyze bilateral trade flows between Albania and other countries based on gravity model of trade. As in the classic model of gravity, the base of analysis are exports - imports flows between Albania and other countries, as well as factors influencing these flows, as for example size of respective economies, distance between countries, differences in economic development, existence of economic agreement, etc.. The aim of the model is to highlight in the case of Albania, the impact of those factors on the economic international trade. Actually, there are already known the main partners of Albania regarding export and import countries. In this point of view, intend of the paper is to go further in the analysis, studying in detail the influence of the factors mentioned above. In this contest, analyzing the export and import flows, in the paper are taken in consideration determining factors: (i) the size of the Albanian economy and that of different countries, which is specified in the respective countries’ GDP, (ii) relative advantages between countries, expressed in labor intensity and concretized in the difference between GDP per capita in Albania and other countries, (iii) geographical distances between countries, (iv) real exchange rate as an important factor affecting trading relations between countries, (v) changes in price competitiveness, reflected in purchasing power parity between countries, and (vi) the existence of special trade agreements between Albania and other countries. As thedatabase in the paperis usedCHELEM-FrenchCEPIIdatabase, which providesabettercomplexityof all dataneededto the model and presents in the mean time anobjectiveratingsystemin international view. The number ofcountriesincluded in the studyis15, including the maincountriestradingwithAlbania. The period of analyse is that ofthe years1991-2009,as the whole period, andspited also in two periods:1991-2000and2001-2009.

  • Issue Year: 8/2012
  • Issue No: 1
  • Page Range: 5-21
  • Page Count: 17
  • Language: Albanian