Georgia’s foreign trade potential with the United States: A Gravity Model approach

Irma Lang; Shota Shaburishvili; Davit Sikharulidze

doi:10.15549/jeecar.v10i7.1400

Authors

Irma Lang Ivane Javakhishvili Tbilisi State University https://orcid.org/0000-0001-6675-3775
Shota Shaburishvili Ivane Javakhishvili Tbilisi State University https://orcid.org/0000-0001-8091-7684
Davit Sikharulidze Ivane Javakhishvili Tbilisi State University

DOI:

https://doi.org/10.15549/jeecar.v10i7.1400

Keywords:

Gravity Model, bilateral trade, Gergia, United States

Abstract

Shortly after the restoration of Georgia's independence, the United States became an important strategic partner. On June 20, 2007, a trade and investment framework agreement was signed between the U.S. and Georgia. This agreement is to expand trade in goods and services between countries, as well as to improve the investment environment in Georgia. Although Georgia does not yet have a Free Trade Agreement with the United States, this research aimed to assess the trade potential between Georgia and the U.S. through a gravity model using panel data for the period 2000-2021. The bilateral trade gravity model was evaluated by EGLS, two-stage EGLS, and GMM techniques, which included the following variables: GDP, population, distance, and trade openness between Georgia and partner countries. In addition, dummy variables such as religion, common border, and trade agreement also play a role. The results of the study also revealed that Georgia's foreign trade potential with the United States is fragile.

Author Biographies

Irma Lang, Ivane Javakhishvili Tbilisi State University

Irma Lang is a Ph.D. candidate in Business Administration at Ivane Javakhishvili Tbilisi State University (TSU), Faculty of Economics and Business. Her thesis focuses on trade relations between Georgia and the United States of America in the global business environment. She is practicing as an independent auditor for internal audits at international NGOs.

Shota Shaburishvili, Ivane Javakhishvili Tbilisi State University

Shota Shaburishvili, Doctor of Economics, is an Associate Professor at Ivane Javakhishvili Tbilisi State University, Faculty of Economics and Business. He is the Chairman of the Board of the International Network of Economic Research. From 2017–2018, he was an advisor at the Advisory Board on Economic Challenges of the President of Georgia. The field of specialization is international business. His research interests include social entrepreneurship, foreign market entry strategies, small and medium businesses, innovative businesses, business technology environments, value chains, and company competitiveness. He is the author of more than 100 published papers.

Davit Sikharulidze, Ivane Javakhishvili Tbilisi State University

Davit Sikharulidze, Doctor of Economics, is an Associate Professor at Ivane Javakhishvili Tbilisi State University, Faculty of Economics and Business. Accreditation and Authorization Expert at the National Center for Education Quality Enhancement of Georgia. Head of the Department of Scientific Research and Development at Eastern European University. He has held several high positions in private and public organizations at various times. He was an invited expert of the Parliament of Georgia, as well as an advisor in the field of economics and an economics expert at the international organization International Alert. He headed undergraduate educational programs in business at Grigol Robakidze University.

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