ME  Vol.1 No.3 , November 2010
Determinants of Egyptian Agricultural Exports: A Gravity Model Approach
Abstract: In this paper, a gravity model approach was employed to analyze the main factors influencing Egypt’s agricultural exports to its major trading partners for the period 1994 to 2008. Our findings are that a one percent increase in Egypt’s GDP results in roughly a 5.42 percent increase in Egypt’s agricultural export flows. In contrast, the increase in Egypt’s GDP per capita causes exports to decrease, which is attributed to the fact that an increase in economic growth, besides the increasing population, raises the demand per capita for all normal goods. Hence, domestic growth per se leads to reduced exports. The exchange volatility has a significant positive coefficient, indicating that depreciation in Egyptian Pound against the currencies of its partners stimulates agricultural exports. Transportation costs, proxied by distance, are found to have a negative influence on agricultural exports. These results are important for trade policy formulation to promote Egyptian agricultural exports to the world market.
Cite this paper: nullA. Hatab, E. Romstad and X. Huo, "Determinants of Egyptian Agricultural Exports: A Gravity Model Approach," Modern Economy, Vol. 1 No. 3, 2010, pp. 134-143. doi: 10.4236/me.2010.13015.

[1]   S. Mohammed, “The Future of Egyptian Agriculture in International Trade,” Working Paper Options Méditerranéennes, No. 9, 1995, Paris.

[2]   G. Shehata, “An Economic Study for Egyptian Foreign Agricultural Trade with Emphases on Relationship with European Union,” The second conference on economical competitiveness, quality of life, and sustainability, kaposvár, 2009, pp. 68-79.

[3]   A. Hamdi, G. Mohamed and Z. Ezzat, “Analysis of Egyptian Grapes Market Shares in the World Markets,” American-Eurasian Journal of Agriculture and Environmental Science, Vol. 3, No. 4, 2008, pp. 656-662.

[4]   M. Sarah, “A Socio-Economic Profile of Egypt: Agriculture (1980-2002),” Working Paper Centre for Project Evaluation & Macroeconomic Analysis, No. 18, Cairo, 2003.

[5]   A. Assem, G. Ahmed, H. Ragab and A. Soad, “Economic Study on Egyptian Agricultural Exports with Reference to North-Sinai Province’S Exports,” Master Dissertation, Suez Canal University, Al-Arish, February 2007.

[6]   J. Tinbergen, “Shaping the World Economy. Suggestion for an International Economic Policy,” Twentieth Century Fund, New York, 1962.

[7]   P. P?yh?nen, “A Tentative Model for the Volume of Trade between Countries,” Weltwirtschaftliches Archiv, Vol. 90, 1963, pp. 93-99.

[8]   I. Martinez-Zarzoso and F. Nowak-Lehmann, “Augmented Gravity Model: An Empirical Application to Mercosur-European Union Trade Flows”, Journal of Applied Economics, Vol. 6, No. 2, 2003, pp. 291-316.

[9]   M. K. Hassan, “Is SAARC a Viable Economic Block? Evidence from Gravity Model,” Journal of Asian Economies, Vol. 12, No. 2, 2001, pp. 263-290.

[10]   C. Sohn, “Does The Gravity Model Explain South Korea's Trade Flows?” Japanese Economic Review, Vol. 56, No. 4, 2005, pp. 417-430.

[11]   M. Bussiere and B. Schnatz, “Evaluating China’s Integration in World Trade with a Gravity Model Based Benchmark,” Working Paper European Central bank, No. 693, Frankfurt, 2006.

[12]   N. Huot and M. kakinaka, “Trade Structure and Trade Flows in Colombia: A Gravity Model,” ASEAN Economic Bulletin, Vol. 24, No. 3, 2007, pp. 305-319.

[13]   C. Andre and E. Joel, “South Africa’s Wood Export Potential Using a Gravity Model Approach,” Working Paper Investment and Trade Policy Centre, University of Pretoria, Pretoria, 2008.

[14]   F. Al-marhubi, “Export Diversification and Growth: An Empirical Investigation,” Applied Economics Letters, Vol. 7, No. 9, 2000, pp.559-562.

[15]   D. Dawe, “A New Look at the Effects of Export Instability on Investment and Growth,” World Development, Vol. 24, No. 12, 1996, pp. 1905-1914.

[16]   R. Ali, J. Alwang and P. B. Siegel, “Is Export Diversification the Best Way to Achieve Export Growth and Stability? A Look at Three African Countries,” The World Bank Policy Research Working Paper, WPS 729, Washington, DC, July 1991.

[17]   K. Pulliainen, “A World Trade Study: An Econometric Model of the Pattern of the Commodity Flows in International Trade in 1948-1960,” Ekonomiska Samfundets Tidskrift, Vol. 16, 1963, pp. 69-77.

[18]   J. E. Anderson and W. E. Van,“Gravity with Gravitas: A Solution to the Border Puzzle,” American Economic Review, Vol. 93, No.1, March 2003, pp. 170-192.

[19]   L. Mátyás, “Proper Econometric Specification of the Gravity Model,” The World Economy, Vol. 20, No. 3, 1997, pp. 363-368.

[20]   M. Cortes, “Composition of Trade between Australia and Latin America: Gravity Model,” Working Paper Department of Economics, University of Wollongong, Wollongong, 2007.

[21]   E. Martínez-Galán, M. P. Fontoura and I. Proen?a, “Trade Potential in an Enlarged European Union,” Working Paper Department of Economics at the School of Economics and Management, Technical University of Lisbon, Lisbon, 2002.

[22]   H. Kalbasi, “The Gravity Model and Global Trade Flows,” Global Economic Modeling Conference, Washington DC, 2001. ecomod2001/papers_web/KALBASI.pdf

[23]   H. Kristjánsdóttir, “A Gravity Model for Exports from Iceland”, Working Paper Centre for Applied Microeconometrics, University of Copenhagen, Copenhagen, September 2005.

[24]   S. Guttmann and A. Richards, “Trade Openness: An Australian Perspective,” Research Discussion Paper Economic Group Reserve Bank of Australia, No. 11, Sydney, 2004.

[25]   P. Egger and M. Pfaffermayr, “The Proper Econometric Specification of the Gravity Model Equation: A Three Way Model with Bilateral Trade Interaction Effects,” Working Paper Austrian Institute of Economic research, Vienna, 2000.

[26]   P. Egger, “A Note on the Proper Econometric Specification of the Gravity Equation,” Economic Letters, Vol. 66, No. 1, January 2000, pp. 25-31.

[27]   R. Hausmann, J. Hwang and D. Rodrik, “What You Export Matters,” Working Paper National Bureau of Economic Research, NBER 11905, Massachusetts, December 2005.

[28]   “United Nations COMTRADE Database,” 2010. http://

[29]   Central Agency for Public Mobilization and Statistics (CAPMAS), “Foreign Trade Statistics,” 1994-2009. http//:

[30]   K. Hadri, “Testing for Stationarity in Heterogeneous Panel Data,” Econometric Journal, Vol. 3, No. 2, 2000, pp. 148-161.

[31]   A. Levin, C. F. Lin and C. Chu, “Unit Roots Tests in Panel Data: Asymptotic and Finite Sample Properties,” Journal of Econometrics, Vol. 108, No. 1, 2002, pp. 1-24.

[32]   K. S. Im, M. Pesaran and Y. Shin, “Testing Unit Roots in Heterogeneous Panels,” Journal of econometrics, Vol. 115, No. 1, 2003, pp. 53-74