The Factors Affecting Egypt’s Exports: Evidence from the Gravity Model Analysis

Abstract

This paper investigates the factors that affect Egypt’s bilateral export flows to its main trading partners. Based on the panel data, the gravity model approach has been used to estimate Egypt’s exports through annual data covering the period 2000 to 2013 for 42 main trading partners. The gravity model in its fixed effects panel data explained 84 percent of the fluctuations in Egypt’s exports. The results show that Egypt’s GDP, importer’s GDP, importer’s population, regional trade agreements (RTA) and the border between Egypt and its trading partner are the main factors affecting Egypt’s exports to its main trading partners. All these factors affect Egypt’s exports positively. Transportation costs (distance variable) are found to have negative but insignificant effect on Egypt’s exports. All these results can help the government and policy makers to undertake appropriate measures to improve the performance of the Egyptian foreign trade sector.

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