Gravity Model Approach: An Empirical Application with Implications for BRICS Countries

Abstract

This article aims to identify the main determinants of annual export flow among BRICS countries through the estimation of panel data from 1992 to 2018. The estimated results suggest that gross domestic product (GDP) and trade openness among other factors can explain export flow among BRICS countries. The most important finding of the study is that the formation of BRICS has exercised a negative and significant impact on bilateral trade among member countries. This study also found that the intra-industry trade dominates the intra-BRICS trade. Finally, the study found that the geographical distance between countries might be a factor for impeding trade among member countries. Thus, this study highlights the importance of increasing economic cooperation among these countries in terms of developing infrastructure, signing of free trade agreement (FTA) and increasing people-to-people contacts. JEL Codes: F00, F15, C23, F13