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An Analysis of Cambodia’s Trade Flows: A Gravity Model

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  • Kim, Sokchea

Abstract

This paper aims at investigating the important factors affecting Cambodia’s trade flows to major 20 trading countries from 1994 to 2004. The analysis employs a gravity model with some modifications. Assuming that other factors are constant, the results indicate that the trade flows significantly depend on the economic sizes of both the exporting and importing countries and Cambodia appears to trade more with neighboring countries. In addition, the tests also detect the significant negative impact of exchange rate volatility on the trade flows as well as aggregate exports; however, there is little evidence that the depreciation of Cambodia’s currency, the riel, affects its exports. Nonetheless, the tests using sub-period samples suggest that the positive impacts of bilateral exchange rate depreciation are found significant in sub-period I (1994-1998), but not in sub-period II (1999-2004). Finally, the paper also shows consistent findings that ASEAN membership play little role in boosting trade flows in the region; however, the results in sub-period II suggest that ASEAN membership helps improve border trade which suffered from Asian financial crisis.

Suggested Citation

  • Kim, Sokchea, 2006. "An Analysis of Cambodia’s Trade Flows: A Gravity Model," MPRA Paper 21461, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:21461
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    File URL: https://mpra.ub.uni-muenchen.de/21461/1/MPRA_paper_21461.pdf
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    References listed on IDEAS

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    2. repec:ebl:ecbull:v:6:y:2004:i:4:p:1-8 is not listed on IDEAS
    3. SaangJoon Baak, 2004. "Exchange Rate Volatility and Trade among the Asia Pacific Countries," Econometric Society 2004 Far Eastern Meetings 724, Econometric Society.
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    8. International Monetary Fund, 2004. "Cambodia: Ex Post Assessment of Longer-Term Program Engagement," IMF Staff Country Reports 2004/324, International Monetary Fund.
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    Cited by:

    1. Hippolyte, Rommell, 2012. "Determinants of Barbados Exports: Preliminary Analysis using a Gravity Model Approach," MPRA Paper 75321, University Library of Munich, Germany, revised Jun 2015.

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    More about this item

    Keywords

    Trade flows; gravity model; exchange rate volatility; aggregate exports; bilateral exchange rate depreciation; ASEAN; Asian financial crisis;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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