Geographical orientation of exports: looking beyond the gravity model (on the example of four "Asian Tigers")
As the pace of globalization accelerates, the transport and information technologies develop even more rapidly, and a large number of companies of different sizes get involved in international trade, wider range of factors affect the volume and geographic focus of trade. This article tests the hypothesis that while entering foreign markets, along with the geographical distance and GDP of partner countries (the classical gravity model), the "psychic distance", also, plays an important role. Singapore, Hong Kong, South Korea, and Taiwan are the economies of the Asia-Pacific region that have achieved impressive development goals since the end of the 20th century. Rapid growth was partially triggered by the export orientation of these economies. In the foreign trade structure of the "Four Asian Tigers", primary goods make up no more than 2%. At the same time, the exports of manufactured goods - which exhibit inconsistency in quality, heterogeneity, and various specific features - should be strongly influenced by the psychic distance. The success of such products sales in the foreign market largely depends on the individual qualities of the product and the seller's marketing strategy. This article presents the results of a study of the influence of a number of factors, in addition to those nderlying the gravity model, on the export flows of the "Four Asian Tigers" (Singapore, Hong Kong, South Korea, and Taiwan) to 88 countries. The relationship between the explanatory variables (cultural distance, other determinants of psychic distance, time difference and the existence of free trade agreements) and the volume of exports to each of the 88 trading partners was tested by using regression analysis. The gravity model indicators (physical distance and GDP) were used as control variables. Based on the results of the study, the authors came to the conclusion that the complete picture of the dependence of export flows, in particular, on psychic distance, is ambiguous. Perhaps the existing models for measuring psychic distance at the country level require changes, a revision of the factors included.