Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments October 21, 2021 erstellt
Description:
This study examines the determinants of foreign trade in Nepal. Exports andimports of Nepal are the dependent variables. The selected independent variables are GDP ofNepal, GDP of trading partners, real effective exchange rate, distance, regional economicintegration, per capita GDP of Nepal, per capital GDP of trading partners, economic freedom ofNepal and economic freedom of trading partners. The study is based on secondary data of 21trading partners of Nepal with 210 observations for the period of 2010 to 2019. The data arecollected from the Direction of Trade Statistics (DOTS) dataset of International Monetary Fund(IMF), World Development Indicator database of World Bank, CEPII gravity data set and theHeritage Foundation. The regression models are estimated to test the impact of various variableson the exports and imports of Nepal. The study showed that GDP of Nepal has a positive impacton exports of Nepal. It indicates that increase in GDP of Nepal leads to increase in exports ofNepal. Similarly, GDP of trading partners has a positive impact on exports. It indicates thatincrease in GDP of trading partners leads to increase in exports of Nepal. Likewise, distance has anegative impact on exports. It indicates that greater the distance with the trading countries, lowerwould be the exports of Nepal to those trading partners. Moreover, real effective exchange rate hasa positive impact on exports. It indicates that increase in real effective exchange rate leads toincrease in exports. In addition, SAFTA membership has a positive impact on exports. It indicatesthat SAFTA membership leads to increase in exports of Nepal. Furthermore, the study revealedthat economic freedom index of trading partners has a positive impact on exports. It indicates thatincrease in economic freedom index of trading partners leads to increase in exports of Nepal. Inaddition, the study shows that GDP of Nepal has a positive impact on imports of Nepal. Itindicates that increase in GDP of Nepal leads to increase in imports of Nepal. Similarly, GDP oftrading partners has a positive impact on imports. It indicates that increase in GDP of tradingpartners leads to increase in imports of Nepal. Likewise, distance has a negative impact onimports. It indicates that greater the distance with the trading countries, lower would be theimports of Nepal from those trading partners. Similarly, real effective exchange rate has a positiveimpact on imports. It indicates that increase in real effective exchange rate leads to increase inimports. The study also reveals that GDP per capita differential has a positive impact on imports. Itindicates that higher the GDP per capita differential, higher would be the imports of Nepal