Determinants of commercial flows of capital goods in developed economies

Abstract

The purpose of this article is to determine the impacts of bilateral and multilateral resistance on the trade of capital goods between developed countries (with per capita income greater than US$12,615 in 2012). Research on the determinants of trade in capital goods is relevant because the expansion of the supply of these goods has positive effects on productivity and output growth and there is a lack of studies on the subject. Applying the recent theoretical and empirical developments of the gravitational model, it was found mainly the positive effects of regional agreements and the negative effects of tariff barriers for the trade of capital goods between developed countries. The results indicate that trade policies that promote regional trade agreements and tariff reduction have positive effects on trade flows of these goods and may stimulate the economy through increased productivity and capital accumulation.