Analysis On The Influence Factors The Republic Of Peru Trade

The Trade of merchandises between the world's economies and the Foreign Direct Investments are some of the major variables influencing a country's economic growth.Through the last decades,the economic opening of nations over the two variables mentioned above,have been very important for the Republic of Peru.For example,Peru began a trade opening in the Nineties,having managed to negotiate and to sign FTAs with main and blocks of countries on exports and imports.It is the case to emphasize the good commercial relationship of Peru with the United States of America and the People's Republic of China,first and second world economies,respectively.The trade stimulates,among other things,innovation and technology transfer,as it competes abroad with other countries by entering new international markets.This leads firms to invest in research and development.This is important for developing countries such as Peru,as it facilitates access to new technology and encourages the generation of proprietary technologies within the country.This research is aimed at analyzing what has been the behavior of the international trade between Peru and its major trading partnerships from 1997 to 2016 through the statistical data and the gravity equation for international trade.It will be very interesting to know what the main factors are influencing the international trade of Peru with its trading partners.These factors could be:GDP,population size,distance between countries,etc.For this,an empirical analysis will be carried out using the gravitational model for international trade.We believe that the application of the gravity equation for international trade will be innovative,since there are not many similar researches on Peru's trade.This paper will be able to analyze the main products that Peru trade,as well as the potential exports goods for Peru to the world.The research also can identify if there are new Peruvian companies exporting to the foreign markets,that means more employment and services in the Peruvian population.In the same way,it will be possible to identify where the foreign direct investment in Peru is distributed,given the potential of natural resources,the industry and the business environment that Peru has.In this sense,we can say that the trade between Peru and its major trading partners has increased in recent years,especially after the signing of the Free Trade Agreements.For instance,currently,The People's Republic of China is the Peru's first major trading partner.At the end of 2016,the Peruvian exports to China were approximately US$ 8.484 billion;and Peruvian imports from China were approximately US$ 8.244 billion.In addition,new Peruvian products have entered to the Chinese market,such as asparagus,grapes and avocado,and new Peruvian companies have been established to export to China.In terms of foreign direct investments to Peru,it can be mentioned that it was ascending from the Nineties until the year 2012,but then it has been declining until 2016.While foreign direct investment worldwide has not grown,the Peruvian authorities have been implementing policies to attract more foreign capital flows with attractive projects and investment opportunities,especially in the Mining sector.According to the Ministry of Energy and Mines of Peru,there are investments commitments from Chinese companies for nearly US$ 20 billion in the coming years.This research also includes comments and opinions of officials from public institutions,entrepreneurs and researchers from Peru.They provide recommendations to increase trade between Peru and its major trading partners.The first chapter of this research will deal with the current economic situation of Peru,its main macroeconomic indicators and the description of certain indexes at global level,such as "Doing Business Report".Likewise,the research question and the objectives pursued will be formulated.The second chapter will review the main theories of international trade and foreign direct investment.In addition,information will be provided on the theories of the gravity equation model,as well as some papers on the internationalization of companies and what their characteristics are for investing abroad.This chapter will describe some important policies implemented by Peru to stimulate trade with other countries and to attract foreign investment.In the third chapter,the behavior of 2016 trade and investment in the world will be discussed,based on the WTO,CEPAL,UN COMTRADE and UNCTAD reports.The chapter will include economic relations between Peru and its main trading partners,especially in terms of trade and investment.The main products exported and imported by Peru and the investment opportunities offered by the country will also be reviewed.The fourth chapter will describe the data that will be used to develop the empirical analysis,as well as all the variables that are necessary to be able to estimate the gravitational model for international trade between Peru and its main trading partners.The results of the empirical analysis will be detailed and the comments on the findings of the estimates will be made.The fifth chapter will provide the conclusions and policy suggestions to which this research has come.References of all sources consulted by the author of this research shall be detailed in the sixth chapter.