Testing the Gravity Model in Iran and Some Oil Exporting Countries

Abstract

One way to expand the trade flows of Iran is investigation and testing of the new international trade patterns about Iran ! s trade. So, analysing of gravity model as the most applicable model of trade is useful .Gravity type models have often been used to analyse trade flows based on the economic sizes of (often using GDP measurements) and distance between countries and trade blocks. In this paper, we test the gravity equation for analysing of Iran ! s export to 12 oil exporting countries. Result shows that Iran ! s export to developed oil exporting countries like UK and Norway is according to the both factors of gravity model, contain GDP and distance. Also, these results are significant with other oil exporting (developing) countries. Although some countries like United Arab Emirates, Saudi Arabia, Libya, Nigeria are exception. In fact, existing factors in gravity model (GDP and distance) have no effect on determination of Iran

Keywords

• international trade
• gravity model
• panel data model