A GRAVITY ANALYSIS OF GLOBAL DAIRY PRODUCTS TRADE

The study estimates a generalized gravity equation to explore the role of GDPs and per capita GDPs of trade partners in trade of dairy and dairy products across 52 countries over a period of 1990-2000. The study finds that both the individual and combined effects of GDPs and per capita GDPs of importing and exporting countries do not significantly determine dairy and dairy products trade. However, when GDPs and per capita GDPs are interacted with dummies representing development level of importing and exporting countries, then combined effect of GDPs and per capita GDPs became statistically significant. Consequently, results may be due to inflexibility of the parameter estimates caused by double log specification. On over all, the policy related variables and variables that determine trade transaction cost are statistically important