<p>This bachelor thesis aims to estimate Sweden’s export potential towards South-Korea since initial data indicates that Sweden has from 1997 up until 2005 been exporting less to South-Korea when compared to, in general, OECD. Furthermore, South-Korea seems to be a low prioritized market for Swedish firms in the East-Asian region. As many before us, we have used a basic gravity model, including GDP and distance in kilometer has been used as explanatory variables for the observed trade value. The dummy variable land-locked, to estimate trade potential for 15 commodity groups. Sweden was set to be the exporting country, South-Korea the importing country together with all the other OECD members, which were used as points of reference.</p><p>The outcome of the gravity regression shows that distance and the dummy variable landlocked (if a country does not have access to open water) have a very strong relationship to the observed export data. However, GDP was proven to have a very weak relationship to the observed export data thus making the estimation process of trade potential for all, except one, commodity group biased.</p><p>The gravity model has been widely criticized for inflating export potential due to misspecification a problem that we experienced when running our regression. Thus, from this study no strong conclusions can be drawn concerning the trade potential from Sweden to South-Korea.</p>
Identifer | oai:union.ndltd.org:UPSALLA/oai:DiVA.org:hj-6832 |
Date | January 2008 |
Creators | Drottz, Per, Lantz, David |
Publisher | Jönköping University, JIBS, Economics, Jönköping University, JIBS, Economics |
Source Sets | DiVA Archive at Upsalla University |
Language | English |
Detected Language | English |
Type | Student thesis, text |
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