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Feride DOĞANER GÖNEL, Kasım EREN, Aslı ÖZGÜR AKTAY
n
36
Table 4:
EU-members that have Land Borders with BBSCs
Name of the
BBSCs
Number of EU-15 members that are
bordering the BBSCs
Name of the EU-15
members and BBSCs
Albania
1
Greece
Croatia
1
Slovenia
Bulgaria
3
Romania, Greece and Turkey
Romania
2
Bulgaria
Slovenia
3
Austria, Croatia, Italy
Russia
2
Ukraine, Georgia
Georgia
2
Russia and Turkey
Ukraine
2
Russia and Romania
Turkey
3
Bulgaria, Greece, Georgia
3. The Standard Gravity Model: Methodology-Data-Results
3.1 Methodology
Theoretical background of this model depends on the valuable studies of Tinbergen (1962), Anderson (1979),
Bergstrand (1985), Helpman and Krugman (1985), Deardorff (1995), Anderson & Wincoop (2001, 2004). On the
other hand, there are a huge number of empirical studies present significant variables (political, cultural, social,
economic, communicational and historical variables) which have taken into account such as Berstrand (1985),
Helpman (1987), Wei (1996), Limao & Venables (1999), Melitz (2008) and Melitz and Toubal (2012).
As it is expressed in many studies, the simplest form of the gravity equation is written as follows:
Tij A D
Y Y
ij
i j
=
(1)
where is the value of exports from country
i
to country
j
, are the national incomes of
i
and
j
respectively, and is
the distance between these two countries.
A
is a constant term. However following the work of Hans Linnemann
(1966), it is also very common to include population of both sides as an influential variable. Then the equation
becomes:
(
) (
)
Tij A
D
Y Y PoP PoP
ij
i
j
j
j
=
*
*
(2)
This equation is also written as:
(
) (
)
Tij A
D
PoP Y PoP Y
ij
j
j
j
j
=
*
*
(3)
The equation is estimated in log linear form and the model becomes as follows:
(
)
(
)
log
log
log
log
T A
P Y
P Y
D
ij
i
i
j
j
ij
ij
a
b
c
f
= +
+
+
+
*
*
(4)