TRADE, INFRASTRUCTURE AND GEOGRAPHY: AN APPLICATION OF GRAVITY MODEL ON ASIAN ECONOMIES

We investigate the role of infrastructure and geography to understand the implications on exports and economic health for Asian economies. Different dimensions of infrastructure and geography such as hard and soft infrastructure, first-nature and second-nature geographic factors are analyzed. We question whether natural or man-made geographical factors after the transport-infrastructure, whether infrastructure affects bilateral trade, and infrastructure and geography are complementary for economic health or not? For this purpose, we extract the unilateral and bilateral data sets from 2001 to 2017 of Asian economies and used most appropriate techniques e.g. Gravity Model, FE and RE. This paper contributes to the literature by investigating the analysis with a unique way, particularly first-nature geographic factors whereby country required improving the densities and locate to develop the transport-related infrastructure. Furthermore, connect hard and soft infrastructure with geography and economic health. The findings ascertained that natural geographical factors have a higher positive influence on transport infrastructure, including its components, than man-made factors. Furthermore, the railway-density has greatly increased given the geographical factors compared with the road-density and the port-quality. Similarly, the results describe that marginal transport level, the probability of geographic factors and gross domestic product are found to be positive. We conclude that infrastructure and geography are complementary factors in determining the economic health and export. Therefore, countries should focus on the improvement of human economic activities toward transport infrastructure.