Proceedings of Annual Spain Business Research Conference
26 - 27 May 2016, Novotel Barcelona City Hotel, Barcelona, Spain,
ISBN: 978-1-925488-05-0
World Coffee Trade Pattern: A Gravity Analysis
Jemal Abafitaa,c and Chang Soo Kima,b,1
This study investigates the patterns of global coffee trade flows and identifies the
major determinants of global coffee trade. Gravity modeling was employed for the
analysis using a panel data on bilateral coffee trade flows of 18 major coffee
exporters and 201 trading partners for the period 2001-2012. Both exporter GDP
(and population) as well as importer GDP were found important determinants
enhancing coffee trade. Of the bilateral distance variables, physical distance is
found to impede coffee trade, while common border was found to enhance it. On
the other hand, cultural (distance) variables like colonial link and common
colonizer were also found to enhance coffee trade.However, common language
was found to have an unexpected negative impact. Other variables that were
found to significantly enhance coffee trade include depreciation in exporting
country’s exchange rate, the amount of arable land in exporting country and
infrastructure. On the other hand, importing country tariff was found to significantly
reduce coffee trade as expected. The RTA variable had no significant impact on
coffee bilateral trade.
Keywords: Coffee, gravity model, bilateral trade, exports, imports
JEL classification: F14, Q17
a
Institute for Poverty Alleviation and International Development, Yonsei University, Korea
Department of Business Administration, Yonsei University, Wonju, Korea
c
Department of Economics, Jimma University, Jimma, Ethiopia
1
Corresponding author email: kimc@yonsei.ac.kr
b