TITLE:
An Empirical Study of Bilateral Trade in Egypt: Gravity Model Approach (2000-2018)
AUTHORS:
Fatma Sohail, Ahmed Sohail, Weiqiang Wang, Xiaoyin He
KEYWORDS:
Bilateral Trade, Egypt, Gravity Model, Panel Data, Random Model
JOURNAL NAME:
Open Journal of Business and Management,
Vol.9 No.2,
March
31,
2021
ABSTRACT: The foreign trade market is one of the most effective engines of economic
growth in Egypt. Given its importance to the Egyptian economy, the factors
influencing export flows between Egypt to its main trading partners need to be
studied. The gravity model and panel data method is an essential and common
approach for analyzing bilateral trade flows. It has proved to be a valuable
method for analyzing a country’s trade potential and bilateral trade. This
study applied the gravity model with geographical and financial variables.
Moreover, it offers a new empirical perspective to indicate that these
variables have analytical power to explain several factors that influence the
cross-country trade flows; this research explores the relationship of Egyptian
exports to 36 global trading partners across annual data covering a period from 2000 to
2018. In its random effect model of the panel data, the gravity model results
showed that the main factors influencing the Egyptian bilateral trade are
Egypt’s gross domestic product, importer’s gross domestic product, the border
factor, and the distance between Egypt to the main trading partners. Some variables have a positive
coefficient, like population, trade openness rate, and regional trade
agreements, but they are insignificant for the Egyptian bilateral trade. The language
factor is negative and insignificant to Egypt’s trade. These findings will
enable Egypt’s government, policymakers, and traders to make suitable decisions
to develop the influential role of Egypt’s international trade.