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THE DETERMINANTS OF THE ROMANIAN SERVICES IMPORT AND EXPORT FLOWS – A GRAVITY MODEL APPROACH
Abstract
The aim of this study is to assess the determinants of the Romanian services import and export flows between 2005 and 2017. An augmented gravity model and a panel approach were used. The data were collected from World Bank and International Trade Center databases and the EViews 10 was used for regression. The main findings are: the GDP of the partner country, sharing a common language and EU membership positively influence the services import flows, while the geographical distance between countries proved to have a very small negative impact on the services import flows. The Romanian services export trade flows depend on the GDP per capita and on the population of the partner country. The geographical distance between countries has a negative impact on the Romanian services export flows, although lower than in goods trade flows. EU membership has the greatest influence and common border and common language also have a positive influence on Romanian services export flows. The study provides a valuable Romanian insight regarding the services import and export flows. Knowing the determinants of the flows could be useful for the Romanian services importers and exporters. The study contributes to the research regarding the application of the gravity model on services trade flows. Two of the strongest determinants of the services import flows were found to be the independent variable share of services in the partner country GDP and the dummy variable GREATERGDP (has the value 1 if the partner country has a GDP at least as the one of Romania). This dummy variable has a negative impact on the services export flows. The services trade openness of the partner country has a positive impact on the Romanian services export flows. The lack of data on services in the international databases restricted the considered period, as well as potential other determinants, therefore further research is needed.
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