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DETERMINANTS OF THE TRADE BETWEEN BRICS COUNTRIES A GRAVITY MODEL APPROACH
Abstract
The aim of this paper is to find out the main determinants of the bilateral trade between the BRICS countries. The BRICS countries are fast growing, emerging markets, relatively recently known as a group that counts for more than a third of the world’s land and more than 40% of the world’s population. The augmented gravity model was used because is the model that explains most of the international bilateral trade and a panel approach was chosen to address the heteroskedasticity issues. The linear regression using Panel Least Squares Method was performed, with bilateral trade as dependent variable. The findings: The GDP, the population, common language and trade openness have a positive influence on bilateral trade, which is in line with the previous studies. The geographical distance, as a proxy for trade costs, the exchange rate, the market concentration index, the inflation and the export market penetration index are determinants with the negative impact of the bilateral trade of the BRICS countries in the 2009-2021 period.
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