<abstract xmlns="http://www.w3.org/1999/xhtml">

<p>The aim of this paper is to critically analyze the papers from the literature mainstream regarding the gravity model and to identify the main findings. The paper highlights the importance of studying the gravity model in the tertiary business education. Introduced by Tinbergen (1962), the gravity model was widely used to analyze the international trade flows in theoretical, as well as empirical studies. Alongside the classical determinants, economy size, market size and geographical distance, other variables which influence the trade flows were found: trade agreements, foreign direct investments, exchange rate, trade taxes, cultural distance, migration, remoteness, knowledge capital, technological development. There are many controversies regarding the zeroes problem within the model, as well as many controversies on the solutions of the zeroes problem. A meta-analysis and systematic review of the relevant literature in the last 56 years was conducted. From author’s knowledge, this study is the most extended literature review on the gravity model, covering more than 50 years of research. Despite all the theoretical controversies, the gravity model proved to be a robust one, with a great power of explanation in more than 80% of the dynamics and structure of the trade flows. Therefore, the gravity model should be considered a valuable analysis tool in teaching and studying in tertiary business education: international trade, econometrics, statistics, trade policy and so on.</p>
</abstract>

The aim of this paper is to critically analyze the papers from the literature mainstream regarding the gravity model and to identify the main findings. The paper highlights the importance of studying the gravity model in the tertiary business education. Introduced by Tinbergen (1962), the gravity model was widely used to analyze the international trade flows in theoretical, as well as empirical studies. Alongside the classical determinants, economy size, market size and geographical distance, other variables which influence the trade flows were found: trade agreements, foreign direct investments, exchange rate, trade taxes, cultural distance, migration, remoteness, knowledge capital, technological development. There are many controversies regarding the zeroes problem within the model, as well as many controversies on the solutions of the zeroes problem. A meta-analysis and systematic review of the relevant literature in the last 56 years was conducted. From author’s knowledge, this study is the most extended literature review on the gravity model, covering more than 50 years of research. Despite all the theoretical controversies, the gravity model proved to be a robust one, with a great power of explanation in more than 80% of the dynamics and structure of the trade flows. Therefore, the gravity model should be considered a valuable analysis tool in teaching and studying in tertiary business education: international trade, econometrics, statistics, trade policy and so on.

Why should the gravity model be taught in business education?

Bucharest University of Economics Studies

Proceedings of the International Conference on Business Excellence

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

{"article-title":"Why should the gravity model be taught in business education?"}

The aim of this paper is to critically analyze the papers from the literature mainstream regarding the gravity model and to identify the main findings. The...

Why should the gravity model be taught in business education?

Published Online: Jul 27, 2020

Page range: 422 - 433

DOI: https://doi.org/10.2478/picbe-2020-0040

Keywords
gravity model, literature review, international trade, trade determinants, tertiary education

© 2020 Anca Tamaş, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Why should the gravity model be taught in business education?

Published Online: Jul 27, 2020

Page range: 422 - 433

DOI: https://doi.org/10.2478/picbe-2020-0040

Keywordsgravity model, literature review, international trade, trade determinants, tertiary education

© 2020 Anca Tamaş, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Keywords
gravity model, literature review, international trade, trade determinants, tertiary education