Gravity Model Approach Analysis of Nigeria’s Bilateral Shipping Export Trade

Abstract

The quantum and directions of a Nations foreign trade transaction is general viewed as a major determinant of extent of growth and development of the nation in terms of the gross Domestic Product (GDP). The study analyzed the bilateral shipping export trade between Nigeria and China, Nigeria and U.S.A, and Nigeria and India using augmented Gravity Model of trade, by incorporating population of the trading partners, real exchange rate, the prevailing freight rates and spot rates into the original variables of the gravity model which explain volume of bilateral trade between two countries as a function of distance factors and the economic size. Secondary data was obtained and used in the study. The augmented Gravity Model was used to analyze the data obtained. The results of the study shows that the size of the Nigerian economy measured by the GDP has significant influence on the value of Nigeria’s bilateral shipping export trade with the U.S.A, China and India over the period covered in the study. The individual influences of the other distance, external and internal factors of bilateral trade between Nigeria and the selected countries were discussed in the study. The result also shows that distance factors consisting of TEU transportation cost and per ton transportation cost for wet bulk cargo; and the internal factors consisting of the size of the Nigerian economy/GDP, local population and real effective exchange rate of Nigeria, individually have no significant influences on the value of Nigeria bilateral shipping export trade to the U.S.A. China and India.