Title: Economic, institutional and environmental drivers of foreign trade

Authors: Oleksandra Kubatko; Aleksandra Kuzior; Bohdan Kovalov; Ihor Rekunenko; Yevheniia Stepanenko; Victoria Sulym

Addresses: Institute of Business, Economics and Management, Sumy State University, 39 Soborna St., 40000 Sumy, Ukraine ' Faculty of Organization and Management, Silesian University of Technology, 26-28 Roosevelt St., 41-800 Zabrze, Poland ' Economics, Entrepreneurship and Business Administration Department, Sumy State University, 2 Rimskogo-Korsakova St., 40007 Sumy, Ukraine ' Institute of Business, Economics and Management, Sumy State University, 39 Soborna St., 40000 Sumy, Ukraine, Sumy, Ukraine ' Center of Economic Research, Sumy State University, 2 Rimskogo-Korsakova St., 40007 Sumy, Ukraine ' Institute of Business, Economics and Management, Sumy State University, 39 Soborna St., 40000 Sumy, Ukraine

Abstract: This work applies the gravity model of foreign trade for selected EU countries to identify the crucial factors influencing trade flows. Regarding this, data on exports and imports of 27 EU countries in the period from 2012 to 2019 were collected. It was found that CO₂ emissions have a more significant impact than the average GDP for the bilateral trade between the EU and Ukraine, which proves the 'pollution heaven' hypothesis. For the trade relations between the EU and Germany, it was found that the average GDP of both countries is statistically significant for bilateral trade. The greater the 'mass' of countries, the greater the volume of imports and exports between them. The results of model estimation allow being logically interpreted in economic terms. The suitability of basic gravity models as tools for analysing trade flows and identifying trade potential was confirmed.

Keywords: gravity model; CO₂ emissions; bilateral trade; mass of countries; distance between countries.

DOI: 10.1504/IJESD.2024.141861

International Journal of Environment and Sustainable Development, 2024 Vol.23 No.4, pp.480 - 499

Received: 19 Nov 2022
Accepted: 20 Nov 2023
Published online: 02 Oct 2024 *

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