A gravity panel data analysis of foreign trade by regions: the role of metropolises and history

Tomasz Brodzicki , Stanisław Umiński

Abstract

A gravity panel data analysis of foreign trade by regions: the role of metropolises and history. Regional Studies. The paper investigates the determinants of the intensity of foreign trade of the Polish NUTS-2 regions over 1999–2011 with an augmented panel gravity model. In an attempt to obtain unbiased results, it estimates a semi-mixed effect model with the Poisson pseudo-maximum likelihood (PPML) method. The results clearly demonstrate the robustness of the gravity model. Furthermore, path dependence within the context of regional development, due to the historical partitions of Poland, still plays a significant and robust role. Trade persistence has been confirmed. Metropolitan regions, ceteris paribus, trade more intensely, which proves their role as nodes in global trade flows.