The international sugar trade under the model of the gravitational perspective

Abstract

The objective of this paper was to study the international sugar trade from the perspective of the gravity model. Data were collected from 87 major exporters of sugar extracted from UNComtrade database. The variables used were GDP, population, distance, price, the exporting country and area dummies of the exporting country participation in an economic bloc. The panel data for the gravity model with Random Effects and heteroscedasticity correction showed that the independent variables explain, in general, 53.41% of world exports of sugar from 2000 to 2012. Only the variable distance coefficients and included dummies to capture the effect of global sugar exports to the CARICOM member countries and CAFTA-DR statistically significant. Still, the distance the signal was positive, indicating that an increase of 1% in the distance raises sugar exports in 1.42%. According to the gravitational model, this result reflects an unexpected occurrence. However, the explanation of this relationship is the competitive advantage of countries exporting sugar, especially Brazil, whose market share is high, and that the product suffers strong marketing restrictions, such as subsidies, quotas and other restrictions on imports.