Growing olive oil export and intra-industry trade in Mediterranean countries: Application of gravity model

Kenichi Kashiwagi*, Yamna Erraach, Lamia Arfa, Lokman Zaibet

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

9 Citations (Scopus)

Abstract

While olive oil production is spreading to the non-traditional producer countries, including the US, Australia, and New Zealand, Mediterranean countries are still major producers and exporters. However, little is known about their olive oil exports simultaneously growing in tandem with their large volume of imports. This paper examines the factors that affect olive oil exports and imports in Mediterranean countries. Using balanced panel data of olive oil trade in Mediterranean countries from 1998 to 2016, we estimated the commodity-specific gravity model. Results suggest that an increase in the overall bilateral size of trading partners positively affects the flow of olive oil trade. The difference in factor endowments has a negative impact on exports, whereas its effect is positive on their imports. The members of the European Union (EU) are competitive in olive oil export, and the volume of its import is large among the EU countries whose per capita income and demand properties are similar. These results support Linder's hypothesis rather than the predictions from the traditional Heckscher-Ohlin trade theory. The simultaneous export and import of olive oil in Mediterranean countries implies the relevance of a growing intra-industry trade rather than a country's specialization following its comparative advantage.

Original languageEnglish
Article number7027
JournalSustainability (Switzerland)
Volume12
Issue number17
DOIs
Publication statusPublished - Sep 2020

Keywords

  • Gravitymodel
  • Intra-industry trade
  • Linder's hypothesis
  • Mediterranean countries
  • Olive oil

ASJC Scopus subject areas

  • Geography, Planning and Development
  • Renewable Energy, Sustainability and the Environment
  • Environmental Science (miscellaneous)
  • Energy Engineering and Power Technology
  • Management, Monitoring, Policy and Law

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