Determinants of Tunisia's exports: A gravity model framework

Abstract

This paper applies the gravity trade model to explain Tunisia's exports pattern with non-traditional partner's countries and to determine the main factors explaining Tunisia's exports with these countries. We estimate our model over the period 1986 - 2009 for a sample of 36 countries. A two step estimation procedure is used in this paper to estimate time invariant parameters and dummy coefficients. Estimation outcomes show that Tunisia tends to exchange more commodities with close countries and with countries having common maritime borders. Estimations provide strong evidence that the economic size of the partners, Tunisia trade openness policy, development of foreign direct investment, can stimulate exports to the selected countries. Furthermore, contrary to the geographic distance, the existence of a common language does not role on the Tunisia exports to these destinations. The result shows that Tunisia has tremendous potential to develop trade relationship with the selected partner countries. © International Economic Society.