49 / 514
Feride DOĞANER GÖNEL, Kasım EREN, Aslı ÖZGÜR AKTAY
n
38
Table 5:
Regression Results of the Standard Model
Variables
(1)
(2)
(3)
Pooled OLS
RE
FE
lnGDP exp
1.364***
0.879***
0.627***
[0.024]
[0.056]
[0.135]
lnGDP imp
1.070***
0.643 ***
0.890***
[0.031]
[0.103]
[0.286]
RTA
0.394***
0.203*
0.188
[0.067]
[0.147]
[0.154]
LnDist
-1.040 ***
-0.950***
[0.080]
[0.308]
Border
-1.702 ***
1.319***
[0.190]
[0.527]
Year1998
0.448***
-0.020
-0.068
[0.142]
[0.132]
[0.130]
Year2009
-0.625***
-0.182***
-0.112***
[0.115]
[0.036]
[0.2445]
R
2
0.73
0.90
0.90
Num. of. Observations
2106
2106
2106
Notes: Robust standard errors are in parenthesis. (***), (**), and (*) indicate %1,%5 and %10 significance
levels respectively.
According to the derived results, the estimated coefficients on GDP in all cases are significant at the 1% level and
have the expected sign. In other words the estimated coefficients on GDP-BBSCs elasticity of exports with respect
to GDP-EU15 countries are positive and significant which means economic size of EU-15 is important for BBSCs’
exports; if export will increase by 1% the GDP will increase by 0.627 and if import will increase by 1% the GDP
will increase by 0.890.
Naturally the distance term is only significant in pooled-OLS specification and the coefficient is negative as we
expected. From the pooled-OLS specification this result confirms the gravitational approach.
On the other hand, the CIS (here only Russia and Ukraine) countries were heavily impressed by the Russian Crisis
of 1998. So we used 1999 and 2008 time dummies to control for economic shocks. There isn’t any strong results
for 1998-crisis but the coefficient for other time-dummy (2009) is negative and significant. Table 7 presents the
time parameter estimates for three specifications. Another finding is that the RTAs have not led to an increase in
the share of trade of BBSCs vis-à-vis the EU-15.
4. Conclusion
This study examines BBSCs trade relations using baseline gravity model. It is expected that BBSCs establish close
trade relationship with the EU-15 countries which are economically stronger and also geographically closer.
Based on the data on trade flows between BBSCs and EU-15 countries, it is possible to say the basic gravity model
works well in this relationship. Positive sign of the GDP coefficients for both exporting and importing countries