The Gravity Equation and Cost of Trade
This video covers the "gravity equation," which explains that if two countries are far apart geographically, the trade between those countries decreases. Natural
This video covers the "gravity equation," which explains that if two countries are far apart geographically, the trade between those countries decreases. Natural trading partners tend to be the countries closest to each other, even if neighboring economies are significantly smaller. For instance, Canada and Mexico trade the most with the United States. This video also discusses what contributes to the cost of trade across borders for developed countries — and you may be surprised to find that tariffs present a relatively small barrier to trade in comparison with other barriers in language, currency, information costs, security, and policy.
Contributed Content (0)
Ask a Question
Very good video. Do more elaborate models of the equation include a sort of n-body consideration for the number of local nations? And are there recursive models of the equation that incorporate adjustments to some of the more elastic/flexible factors like language?
What explains the pattern of trade across countries?
What explains the changes in trade patterns over time?
Which goods do countries trade?
Which kind of firms trade?
What can explain the growth in trade? Does trade affect GDP growth?
What are the effects of trade on the labor markets?
What is the role of outsourcing, foreign direct investment (FDI) and
multinational production (MP)? How do they affect trade patterns?
All these are the questions arises in my mind about the international Trade after reading some papers from custom essay writing service. Hope the the video will give a clear answer to my question.