Gravity Analysis: Potential of Trade (Export) for Ecuador in CSG Products in 2010

We use the estimated equation of the gravity model to predict the values of imports (log). If the actual imported values of CSG exceed the fitted values, we call it import potential for the importing country or export potential for the Exporting Country. We get the following results. The first column depicts the import potential of the reporter or the importing country (second column) or the export potential of the exporting country (third column and is Ecuador). Positive values mean positive export potential (for exporters-Ecuador) or import potential (for importers). Ecuador seems to have positive export potential for CSG products with respect to Bolivia, Chile, Colombia, Peru and Singapore. The export potential with respect to its four Latin American Partners works out to be 34.84 million US $. There is, however, negative potential for exports of CSG to all its Latin American partners taken together (Argentina, Bolivia, Brazil, Chile, Columbia, Paraguay, Peru and Venezuela of the tune of negative 4.9 million. This is because of high negative potential with respect to Venezuela, Argentina and Brazil. These countries may be are more inclined towards exporting the CSG products to Ecuador rather than importing it. SMART analysis had shown that it is more beneficial for Ecuador to liberalize its trade with the China, Japan and the US. Both Ecuador and the trading partners China, Japan and the US gain by such a move. The next table (next section) confirms the same. There is lot of potential gains (for both Exporters and for Ecuador importing the CSG product) if Ecuador liberalizes its trade with the China, Japan, the US and the EU.

Reviews is used for regression analysis

Gravity Analysis: Export Potential in CSG for Other Countries targeting Ecuador

The export potential for China, Japan and the US works out to be 95 million US $ in CSG. The export potential of the Latin American partners( Columbia, Argentina, Brazil, Paraguay, Uruguay, Chile, Peru, Bolivia and Venezuela) works out to be little more than 13 million US $. This confirms the SMART results earlier that for Ecuador, it is more beneficial for Ecuador to liberalize its CSG trade with the China, Japan, the US and EU27 rather than with MERCOSUR countries. There are more gains for both Ecuador and its trading partners if its liberalizes its trade of CSG with the most efficient suppliers of CSG products, the Japan, the China, EU27 and the US.