The aim of the thesis is to introduce the current economic situation of Italy, is macroeconomical characteristics and features. Gravitz model of international trade is introduced here and applied to analyse trade relations of Italy with its major business partners. Recommendations and ways to improve its trade balance by increasing exports are presented in the thesis.

<p>Detta är en undersökning av Sveriges statsbesöks effekt på Sveriges export. För att mäta effekten använder jag mig av en empirisk modell, den så kallade handelsgravitationsmodellen. Jag finner att det är svårt att hitta starka och statistiskt signifikanta bevis på att Sveriges statsbesök har en positiv effekt på exporten. När man isolerar för statsbesök i Europa utanför Norden finner jag till och med tecken på att de kan ha en negativ effekt. Jag har även jämfört effekten av Sveriges statsbesök med effekten av Storbritanniens och funnit att Sverige har en generellt lägre effekt än Storbritannien, oavsett vilken modell som används.</p>

Detta är en undersökning av Sveriges statsbesöks effekt på Sveriges export. För att mäta effekten använder jag mig av en empirisk modell, den så kallade handelsgravitationsmodellen. Jag finner att det är svårt att hitta starka och statistiskt signifikanta bevis på att Sveriges statsbesök har en positiv effekt på exporten. När man isolerar för statsbesök i Europa utanför Norden finner jag till och med tecken på att de kan ha en negativ effekt. Jag har även jämfört effekten av Sveriges statsbesök med effekten av Storbritanniens och funnit att Sverige har en generellt lägre effekt än Storbritannien, oavsett vilken modell som används.

This thesis investigates the question if the estimation of gravity model of in- ternational trade based on the logarithmic transformation of the model is ad- visable when panel data are employed for the estimation. We have derived theoretically that in the presence of heteroskedasticity the logarithmic trans- formation causes inconsistency of the estimated coefficients. According to the literature, we have recommended rather the Poisson pseudo maximum likeli- hood estimation technique for the empirical research of the gravity model. We have also provided an empirical analysis of Czech and German panel data sets based on the comparison of the performance of traditional and Poisson estima- tion approaches. This analysis confirrms Poisson pseudo maximum likelihood estimation method as a more proper method for estimating the coefficients of the gravity equation.

<p>The link between foreign direct investments (FDI) and trade is firmly established in economic literature. Yet despite the vast amount of literature on this subject, very few have tried to look at FDI through the lens of trade theory, choosing rather to approach the subject on either a macroeconomic-level or on firm-level. The purpose and scope of this paper is to explore FDI through the lens of trade-theory. The central questions in this thesis are whether the gravity model of trade can serve as a reliable model for FDI value as well? Are there certain variables in the gravity model that are distinctively powerful determinants of FDI? Two econometric models are used to determine the gravitational impact on FDI, one ordinary OLS model and one fixed-effect model. The findings when using OLS regressions are that the components of the gravity model of trade are indeed key determinants of FDI value, and the two most significant positive determinants were home country GDP as well as home country per-capita GDP. In the fixed-effect model however, several variables were found to have no significant effect on FDI value and only home country GDP and host country per-capita GDP were consistent positive determinants of FDI.</p>

This thesis investigates the determinants of Taiwan’s import changes and the underlying factors of the decreasing Swedish export to Taiwan between 1994 and 2005. The empirical study includes 36 countries from both the Pacific Rim and OECD. Based on a modified gravity model of trade, the regression model aims to examine how GDP growth in the exporting country, exchange rate changes, common language, and membership in APEC affect Taiwan’s import volume. The result shows estimates with expected signs, with 49.8 percent of the vari-ance in Taiwan’s changed import volume explained by the exogenous variables. Exchange rate change and language are statistically significant. Data on commodity groups of importance for Sweden and Taiwan are also ex-amined, and they show that Taiwan has changed its import demand and has started to import goods other than those Sweden in previous years strongly exported to Taiwan. Taiwan’s regional trading partners have also gained export shares at the expense of Swedish exports. The results are in line with theory and it will be hard for Sweden in the future to compete with the increasing regional trade of East Asia where common lan-guage and culture are of big importance.

The link between foreign direct investments (FDI) and trade is firmly established in economic literature. Yet despite the vast amount of literature on this subject, very few have tried to look at FDI through the lens of trade theory, choosing rather to approach the subject on either a macroeconomic-level or on firm-level. The purpose and scope of this paper is to explore FDI through the lens of trade-theory. The central questions in this thesis are whether the gravity model of trade can serve as a reliable model for FDI value as well? Are there certain variables in the gravity model that are distinctively powerful determinants of FDI? Two econometric models are used to determine the gravitational impact on FDI, one ordinary OLS model and one fixed-effect model. The findings when using OLS regressions are that the components of the gravity model of trade are indeed key determinants of FDI value, and the two most significant positive determinants were home country GDP as well as home country per-capita GDP. In the fixed-effect model however, several variables were found to have no significant effect on FDI value and only home country GDP and host country per-capita GDP were consistent positive determinants of FDI.

This thesis investigates the relation between trade and convergence for Turkey and EU-15 in the period 1980-2008. The countries and time period are selected because Turkey has intensive trade relation with EU-15, and these economies had experienced conversion in their economic structures and adopted liberal economic policies, as well as liberal trade policies in this period. Using panel data methods two equations are estimated / an income dispersion equation for the impact of bilateral trade on per capita income differences and a gravity model of trade for the impact of per capita income differences on bilateral trade. Overall findings of this study give strong evidence for the hypothesis that trade causes convergence, whereas weaker support for the thesis that convergence causes trade.

<p>This thesis investigates the determinants of Taiwan’s import changes and the underlying factors of the decreasing Swedish export to Taiwan between 1994 and 2005.</p><p>The empirical study includes 36 countries from both the Pacific Rim and OECD. Based on a modified gravity model of trade, the regression model aims to examine how GDP growth in the exporting country, exchange rate changes, common language, and membership in APEC affect Taiwan’s import volume. The result shows estimates with expected signs, with 49.8 percent of the vari-ance in Taiwan’s changed import volume explained by the exogenous variables. Exchange rate change and language are statistically significant.</p><p>Data on commodity groups of importance for Sweden and Taiwan are also ex-amined, and they show that Taiwan has changed its import demand and has started to import goods other than those Sweden in previous years strongly exported to Taiwan. Taiwan’s regional trading partners have also gained export shares at the expense of Swedish exports.</p><p>The results are in line with theory and it will be hard for Sweden in the future to compete with the increasing regional trade of East Asia where common lan-guage and culture are of big importance.</p>

Based on the gravity model by Baier and Bergstrand (2001), we use a static and dynamic panel data approach to estimate the relative contributions of income growth, income convergence, and the reductions in tariffs and trade costs to the growth of intra-EU trade over the period 1960 to 2000. The results suggest that income growth was the major force, accounting for approximately two third of total growth. Trade liberalization still had a sizeable effect, accounting de facto for the rest of growth, while income convergence played only a minor role. Reductions in trade costs had no significant effect on the growth of intra- EU trade. The results turn out as robust against several robustness checks and the use of alternative estimators. / Series: EI Working Papers / Europainstitut