1. Over the past few decades, East Asian economies have increased their share of world GDP. Similarly, intra-East Asian trade - that is, trade among East Asian nations - has grown as a share of world trade. More than that, East Asian countries do increasing share of their trade with each other. Explain why, using the gravity model. (10 marks)

2. The gravity model is often used to not only explain trade between two countries, but also to investigate the reasons why they don't. Illustrate this anomaly with suitable examples and reasons. (5 marks)