Circumstances for exports

Economic size and distance are by far the most accurate predictors of the volume of trade between two areas. Irrespective of other factors, the Netherlands exports more to large than to small economies and more to areas close by than to remote areas. This is based on the gravity model of bilateral trade, which - in turn - is based on the physical law of gravitation. On the basis of regression analysis, an anticipated value of Dutch exports can be calculated for Australia and New Zealand, which can subsequently be compared to real exports. If anticipated value and real value are far apart, it means that factors other than economic size and distance play an essential part.

On the basis of exports to 250 countries, this model estimates how exports, GDP and distance are related and on the basis of these relations, exports to Australia and New Zealand are respectively 85 and 120 percent higher than might be expected in view of economic size and distance.

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