Gravity Model in Foreign Trade(Iraqi Dates as a Case Study)

Abstract

The Gravity Model is considered as one of the important models in foreign trade, because it is used to explain the most important determinants of country exports of it’s exported goods and to determine the competitive state for exports of the country in world market, besides it gives an idea about the most important countries in exporting their goods. The study aims to determine the most important factors affecting the flow of Iraqi dates to world market, and to measure the influence of these factors and to determine suitable model to understand most important determinants of foreign trade of Iraqi dates with most important trading partners. The study proved that per capita of GDP, quantity of commodity produced by country ,quantity of commodity exports from Iraq to global market , export price (FOB) of commodity and equilibrium exchange rate of local currencyversus US$, were the most important factors because these factors formed about (%99) of determinants of flow of Iraqi dates to global market. By analyzing this model with most important trading partners (UAE and Syria), the study found that per capita of GDP representing economic size of the two partners, population in the two partners and the distance between trading capitals with inverse sign were the most important factors.Most of these factors compatible with gravity trade model between states, and these factors determine (%98) and (%58) of changes in flow of Iraqi dates to UAE and Syria respectively.