A Study On Sino-latin American Trade Relationships Form The Perspective Of The Gravity Model

Our paper is an attempt to use the gravity equation model to analyze trade flows during the period of 2004-2015 between China and Latin America.We will analyze economic size,market size,distance,Foreign Direct Investment(FDI),labor force,and unemployment in order to understand the dynamics of the trade relationships between the two regions.The hypothesis is that there is a negative impact on bilateral trade due to geographical distance as well as having a positive impact on economic size;additionally,factors like,labor force,unemployment and FDI perceived by each country affect the trade flows between them.Estimated results reveal that economic size,distance,the FDI perceived by each country and the labor force are all significant explanatory variables with effects on mutual trade.However,unemployment has shown to be of little detriment to each nation's trade.Consequently,our work identifies the challenges for the future in order to improve trade amongst both regions.