Commercial Relations Between Colombia and the European Union: An Empirical Approximation in the Light of the Gravity Model

Abstract

AbstractThe current chapter examines the impact of the European Generalized System of Preferences on Colombian exports over the period 1990–2008. Based on the gravity model of international trade, an augmented gravity equation is tested, capturing economic, geographic, cultural, and institutional factors that are believed to exert an influence upon Colombian trade. The findings indicate that Colombian exports have positively benefited from the unilateral scheme of preferences offered by the European Union, and that this trade mechanism had a large and positive effect on Colombian exports within the period of time analyzed. But, as will be addressed in a next section, this is not synonymous to a more diversified export basket with the EU.KeywordsGravity ModelTrade PartnerBilateral TradeFixed Effect EstimationGravity EquationThese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.