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The actual annual trade between Italy and China is $55 billion and annual trade between China and the U.S. is $650 billion. Note that Italy's
The actual annual trade between Italy and China is $55 billion and annual trade between China and the U.S. is $650 billion. Note that Italy's GDP is $2 trillion, China's GDP is $13 trillion, and the U.S.' GDP is $21 trillion.
The distance between Italy and China is 7600 km.
The distance between China and the U.S. is 11700 km.
Calculate the predicted trade ratio |
Calculate the actual trade ratio
What predictions does the simple gravity model make for trade between (1) Italy and China and (2) China and the United States
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