The Influence Of Diplomatic Relations On Bilateral Trade

In this paper, with the aid of trade gravity model analysis of diplomatic relationsbetween the two countries impact on bilateral trade, in the most basic of trade gravitymodel to join on behalf of the foreign relations of the two variables: diplomatic leveland diplomatic events, carries on the quantitative measures introduced after the model,to extend the gravity model.And then to China in2012and ranked in30countries with the total value ofChina’s import and export as the empirical object, selected in1991-2012China andpanel data of30trading partners through measuring software is used to estimaterandom effects model.Finally the research results show that the two countries’ economies of scale has apositive effect on bilateral trade flows, in which China’s economy relatively tradingpartners the economic scale of a greater impact on bilateral trade. Physical distancehave a negative effect on bilateral trade, and gross domestic product (GDP) ofbilateral trade flows between the two countries is slightly is greater than the positiveeffect of logistics lee from negative effects. This paper has carried on the quantitativemeasure of diplomatic level, and passed the inspection in the gravity model, andobtained has a positive effect on bilateral trade flows. After quantitative measure ofthe diplomatic events, in this model and failed to pass the test.The direction of further research are as follows: in this paper quantitative measureon the result of the diplomatic level, based on the classification of different diplomaticlevel of this article and the score of each layer, or international relations in the field ofeconomy, the paper analyzes the influence of diplomatic level. Diplomatic incidentquantitative measure of further research is needed.