A Panel Data Analysis of Jordan's Foreign Trade: The Gravity Model Approach

This study aims to identify the most important factors affecting the flow of Jordanian foreign trade, with its main trading partners for the period (1995-2016). To achieve this objective, the gravity model was adopted using a random effects model. The empirical findings show that Jordan?s foreign trade is positively determined by Jordan?s RGDP and dummy variable that used to capture the effect of a common border with Jordan. On the other side, distance and similarity index are found to be significant factors in influencing Jordanian foreign trade negatively. Finally, the study found that the RGDP of trade partner and bilateral real exchange rate are not statistically significant