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How does the Size of an Economy Matter? A Panel Data Analysis of China’s Trade by Using the Gravity Model

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  • Md. Al-Amin Parvez

Abstract

The larger the size of the stone the greater the frictions it has to endure while rolling, this is the law of general physics. On that same note, we consider the China’s Economy which has been booming and racing fast towards becoming the NO. 1 economy in the world, is facing and will have to face challenges now and onwards. This paper has made the attempt to provide a brief theoretical justification for using the gravity model in the analysis of bilateral trade and apply the generalized gravity model to analyze the China’s trade with its major trading partners as well as countries in BCIM using the panel data estimation technique. The effect of the size of the economies, per capita GNI differential of the countries involved and openness of the trading countries over the China’s trade have been obtained as the results of the analysis.

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  • Md. Al-Amin Parvez, 2017. "How does the Size of an Economy Matter? A Panel Data Analysis of China’s Trade by Using the Gravity Model," International Journal of Science and Business, IJSAB International, vol. 1(2), pages 37-57.
    • Handle: RePEc:aif:journl:v:1:y:2017:i:2:p:37-57
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    References listed on IDEAS

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