International Trade and its Main Determinants: Case Study

Abstract

The present paper aims to disseminate the relationship between international trade and its determinants. The research objective consists in creating a basic econometric model of analysis in order to observe the correlations that occur among variables related to international trade, exempli gratia: a country’s share in the world trade, the number of multinationals in the host country, the aggregate gross domestic product, the number of working immigrants or the degree of openness to international trade. Analysis will focus on building a relevant equation to capture the existing interrelations between the above variables for a sample of 50 countries. Main findings will show that there are strong connections among the determinants of international trade but they cannot provide a clear picture of the world trade dynamics. There are a series of practical applications that could emerge out of the present study.

Keywords: international trade determinants, openness to trade, principal component analysis, econometric model

JEL Classification: F01, F13, F14, F17, F23