Econometric Models of Foreign Trade in OECD Countries
Author(s)
Guisan, M. Carmen; Cancelo, M. T.
Abstract
Trade has an important role in development as it is deeply related to industrial development, so countries with low levels of industry by inhabitant usually have low levels of national and foreign trade per capita, and very often they have problems of deficit in their balances of payments which lead to increasing external debt and difficulties in promoting development. Foreign trade is particularly important for small countries, or for countries with low levels of production of raw materials. They need to sell goods and services to foreign countries in order to finance some intermediate goods and services necessary for their production, which are not produced in the country and have to be bought in international markets. This article presents some econometric models that take into account both supply and demand sides as determinants of real exports, including the important relationships existing between industrial development and external trade. The models focus on the positive role human capital plays in reducing external debt by fostering the evolution of exports and allowing the increase of imports necessary for industrial development. The analysis is performed with data of 25 OECD countries during the period 1960-97.
