Application of gravity model to explain the effects of diplomatic relations on China’s service trade

ABSTRACT

Using the data of China’s service trade and diplomatic events with 45 countries, this paper examines the effects of diplomatic relations on service trade based on the gravity model. Through an empirical analysis, the results proved that good diplomatic relations can significantly promote the export of China’s service trade and that the effects of diplomatic relations on trade have a clear distinction regarding different political positions. Our results support the view that diplomatic relation does an important role in international trade.

KEYWORDS:

• Services trade
• diplomatic relations
• gravity model
• China

JEL CLASSIFICATION:

• C23
• F15
• F19
• E65

Disclosure statement

No potential conflict of interest was reported by the authors.

Supplementary material

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Notes

¹ 45 countries: Australia, Austria, Azerbaijan, Belarus, Belgium, Bulgaria, Canada, Chile, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hong Kong, Hungary, Iceland, Ireland, Israel, Italy, Japan, South Korea, Latvia, Lithuania, Luxembourg, Malta, Netherlands, New Zealand, Norway, Pakistan, Poland, Portugal, Romania, Russia, Serbia, Singapore, Slovenia, Slovakia, Spain, Sweden, United Kingdom, United States.

Additional information

Funding

This work was supported by the National Office for Philosophy and Social Sciences [18FJY015].