South Africa’s Trade with G20 and Top ten African Countries-Applying Gravity Model

: In this paper, we have used the Gravity model to evaluate the factors or parameters, which eventually influence international trade activities of South Africa based on panel data. We have utilized data of nineteen countries and European Union (Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, Greece , Hungary, Ireland, Latvia, Lituania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain and Sweden) accounting for the G20 nations and top ten African countries namely Nigeria, Egypt, Algeria, Morocco, Sudan, Kenya, Angola, Libya, Tunisia between the time period 2007 to 2016 and the data has majorly been collected from International Trade Centre (ITC), and United Nations Conference on Trade and Development (UNCTAD). The estimated results affirm that there is a definite influence of economic size, market size and distance as they are important determining factors for trade flows in South Africa. of South Africa with its partner nations. Distance has a negative impact on the bilateral trade of South Africa with the partner nations. The impact percentage is -1.04% which is significantly proving a basic characteristic of Gravity model which assumes that there is a negative impact of distance as an independent variable on the bilateral trade flows. The results further show that there is a positive impact of market size or population as an independent variable on the dependent variable that is bilateral trade of South Africa. If population or market size of partner country changes by 1% the trade will change by .08% but s positive similarly if population of South Africa increases by 1%, the trade activities will increase by almost 2.66% respectively.

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