Import Determinants and Potential Markets: A Panel Data Gravity Modelling Analysis for Bahrain

Shujaat Abbas 1  and Abdul Waheed 2
  • 1 Department of Economics, Institute of Business Management, Karachi, Pakistan
  • 2 University of Bahrain, College of Business Administration, Department of Economics and Finance, Sakhir, Bahrain
Shujaat Abbas and Abdul Waheed
  • University of Bahrain, College of Business Administration, Department of Economics and Finance, Sakhir, Bahrain
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Abstract

This study investigates macroeconomic determinants of import flow and explores potential import markets for Bahrain using an augmented gravity model on panel data of 42 trading partners, from 2000 to 2016. The result of panel generalized least square estimation technique shows that the core variables support the theory of the basic gravity model. The estimated results of the augmented variables show that the imports of Bahrain are more responsive to income of trading partners, gross domestic product, and export flow; whereas, negatively determined by the relative price. The findings of dummy variables show that there is a significant role of common language and Gulf economic integration on imports of Bahrain. The results of the import potential analysis show that Bahrain has exceeded its import potential from most of its Asian trading partners; however, positive import potential exists in Africa and America and some selected Middle Eastern and European markets.

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The Review of Middle East Economics and Finance (RMEEF) addresses applied original research in the fields of economics and finance pertaining to the MENA region (Middle East and North Africa), including Turkey and Iran. The journal also publishes articles that deal with the economies of neighboring countries and/or the relationship and interactions between those economies and the MENA region.

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