Trade Potential Revisited: A Panel Data Analysis for Zimbabwe

22 Pages Posted: 20 Jan 2016

See all articles by Enrique Martínez-Galán

Enrique Martínez-Galán

School of Economics and Management (ISEG) of the University of Lisbon; Office for Economic Policy and International Affairs, GPEARI, Ministry of Finance, Portugal; Research Unit on Complexity and Economics; Studies Center for Africa, Asia and Latin America (CEsA)

Isabel Maria Dias Proenca

Technical University of Lisbon (UTL) - School of Economics and Management

Maria Paula Fontoura

Technical University of Lisbon (UTL) - Department of Economics; UECE - Research Unit on Complexity in Economics

Date Written: April 18, 2014

Abstract

This paper notes that previous results on trade potential based on a panel data set may be biased and proposes the adequate Poisson Pseudo Maximum Likelihood method to estimate trade potential based on the elasticity estimates generated by a gravity model, with conclusions on trade potential based on confidence intervals estimated with the Delta method. This approach had not been yet considered in the literature for panel data. This methodology is used to evaluate Zimbabwe export potential in a period characterized by strong restrictions on trade, based on the elasticity estimates generated by an augmented gravity model for six Southern African Development Community member countries and their exports to the rest of the world. Results show that Zimbabwe has a large unexploited trade potential which will not be realized without political stability and structural reforms. For comparison purposes, we also present the gravity coefficients calculated with other estimation methods.

Keywords: gravity model, export potential, Poisson Pseudo-Maximum Likelihood estimator, panel data, confidence intervals, Delta method, Zimbabwe, Southern Africa Development Community

JEL Classification: F14, F15, F16

Suggested Citation

Martínez-Galán, Enrique and Dias Proenca, Isabel Maria and Fontoura, Maria Paula, Trade Potential Revisited: A Panel Data Analysis for Zimbabwe (April 18, 2014). Available at SSRN: https://ssrn.com/abstract=2718097 or http://dx.doi.org/10.2139/ssrn.2718097

Enrique Martínez-Galán (Contact Author)

School of Economics and Management (ISEG) of the University of Lisbon ( email )

Portugal
351218823405 (Phone)

HOME PAGE: http://pascal.iseg.utl.pt/~cesa/index.php/pt/home/455

Office for Economic Policy and International Affairs, GPEARI, Ministry of Finance, Portugal ( email )

Av. Infante D. Henrique, 1-C, 1º
Lisbon, Lisbon 1100-278
Portugal
351218823405 (Phone)

Research Unit on Complexity and Economics ( email )

Rua Miguel Lupi, 20
Lisboa, 1200-781
Portugal
351218823405 (Phone)

Studies Center for Africa, Asia and Latin America (CEsA) ( email )

Rua Miguel Lupi, 20
Lisbon, Lisbon 1249-078
Portugal
351218823405 (Phone)

Isabel Maria Dias Proenca

Technical University of Lisbon (UTL) - School of Economics and Management ( email )

R. Miguel Lupi, 20
Lisbon, 1200
Portugal

Maria Paula Fontoura

Technical University of Lisbon (UTL) - Department of Economics ( email )

R. Miguel Lupi, 20
Lisbon, 1248-078
Portugal

UECE - Research Unit on Complexity in Economics ( email )

ISEG/UTL, Rua Miguel Lupi 20
Lisboa, 1249-078
Portugal

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
21
Abstract Views
790
PlumX Metrics