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About: Gravity model of trade     Permalink

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The gravity model of international trade in international economics is a model that, in its traditional form, predicts bilateral trade flows based on the economic sizes and distance between two units. Research shows that there is "overwhelming evidence that trade tends to fall with distance." The model was first introduced in economics world by Walter Isard in 1954. The basic model for trade between two countries (i and j) takes the form of The model has also been applied to other bilateral flow data (also 'dyadic' data) such as migration, traffic, remittances and foreign direct investment.

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