The Gravity Model of Trade

The Gravity Model of Trade predicts that countries tend to trade more with each other when they are geographically closer and economically larger. It’s similar to Newton’s gravity law: bigger economies have a stronger "pull" on trade, and proximity makes it easier and cheaper to exchange goods. Factors like distance, population size, and economic strength influence trade volume, with closer and larger countries generally exchanging more goods. This model helps understand trade patterns and why some countries trade more than others based on their size and distance.