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A gravity model of trade for Nicaraguan agricultural exports

Author

Listed:
  • Claudio Candia Campano
  • Medardo Aguirre González
  • Lilliam Antón López
  • Javier Beltrán Valdebenito

Abstract

This research aims to find the determining factors of Nicaraguan agricultural exports. To carry out this study, the author formulated a Gravity Model of Trade (GMT) and then made an estimation using a version of Ordinary Least Squares (OLS) that incorporates a consistent covariance matrix estimator to correct the heteroscedasticity and autocorrelation effects. The data considered observations over twenty years and for twelve countries: eight have signed a Free Trade Agreement (FTA) with Nicaragua and four have not. The variables that significantly increased the flow of Nicaraguan agricultural exports are the following: Nicaragua’s trading partners’ population, Nicaragua’s Gross Domestic Product per capita (GDP pc), the Real Exchange Rate (RER), and Nicaragua’s trading partners’ GDP pc; however, the distance variable turned out to be significantly trade-inhibiting. Free Trade Agreements (FTAs) predominantly have significant effects. Este artículo intenta identificar los factores determinantes de las exportaciones agrícolas de Nicaragua. Para realizar el estudio se formuló un modelo gravitacional de comercio (MGC) que luego fue estimado a través de una versión de mínimos cuadrados ordinarios (MCO) que incorpora un estimador consistente de la matriz de covarianzas para corregir los efectos de la heterocedasticidad y autocorrelación. El panel de datos consideró observaciones para veinte anos y doce países, de los cuales algunos han firmado un tratado de libre comercio (TLC) con Nicaragua (ocho) y otros que no (cuatro). Como variables que incrementan significativamente el flujo de exportaciones agrícolas nicaraguenses se encuentran: la población de los socios comerciales de Nicaragua, el producto interno bruto per cápita (PIB pc) de Nicaragua, el tipo de cambio real (TCR) y el PIB pc de sus socios comerciales, mientras que la variable distancia resultó ser significativamente inhibidora del intercambio. En relación con los efectos de los TLC, se observa predominio de efectos significativos.

Suggested Citation

  • Claudio Candia Campano & Medardo Aguirre González & Lilliam Antón López & Javier Beltrán Valdebenito, 2018. "A gravity model of trade for Nicaraguan agricultural exports," Revista Cuadernos de Economia, Universidad Nacional de Colombia, FCE, CID, vol. 37(74), pages 391-428, July.
    • Handle: RePEc:col:000093:016981
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    More about this item

    Keywords

    Gravity model of trade; Nicaraguan agricultural exports; free tradeagreements;
    All these keywords.

    JEL classification:

    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General

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