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CHAPTER 1 INTRODUCTION - Coggle Diagram
CHAPTER 1 INTRODUCTION
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GRAVITY MODEL
The gravity model of international trade in international economics is a model that, in its traditional form, predicts bilateral trade flows based on the economic sizes and distance between two units. Research shows that there is "overwhelming evidence that trade tends to fall with distance
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Distance may also influence personal contact & communication,
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Crossing borders involves formalities that take time & costs. Existence of borders also indicate the existence of different languages & currencies which may impede trade more.
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