Anticipated figure based on size of the economy and geographical distance

Surveys conducted in the past decades on a global scale show that the two decisive factors for the volume of trade between two areas are size of the economy and geographical distance. If circumstances do not change, the Netherlands exports more goods and services to large than to small economies and to nearby than faraway areas. This is based on the gravity model of bilateral trade, which itself is based on the physical law of gravitation. In the Internationalisation Monitor 2016, third quarter, this model was applied to Dutch exports to the 16 federal states in Germany and for 207 countries elsewhere in the world. On the basis of regression analysis, the expected value of Dutch exports to each individual state can be calculated. Subsequently, the result can be compared with the actual export data. If there is a large discrepancy between the anticipated and the actual result, this is an indication that other factors than size of the economy and geographical distance play a major part. The anticipated and the actual values for Germany as a whole are equal to the sum of the values of the 16 German federal states.

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