Investigating the influencing factors revealing a trade potential for eu-china agricultural products: A trade gravity model approach

This chapter investigates the impact of selected economic influencing factors on European Union (EU)-China agricultural trade flows. In the, the agricultural sector has been a key sector for its economic integration and represents 6% of gross domestic production in 2016. Since the 1960s, the agricultural sectors have undergone significant changes in both China and the EU. The literature of this study has been reviewed from two perspectives: one is the theoretical foundation of the trade gravity model and the other is the empirical application of the trade gravity model. The trade gravity model is identified as one of the most widely used empirical research tools of international trade. The independent variable of the geographical distance between the EU and China is automatically dropped in the least squares dummy variable model, due to the fact that geographical distance is relatively fixed compared to other independent variables.