THE MACRO DETERMINANTS OF THE ROMANIAN PHARMACEUTICAL IMPORTS AND EXPORTS IN 2001-2018 PERIOD USING THE GRAVITY MODEL

Abstract

The aim of this paper is to identify the macroeconomic determinants of Romanian pharmaceutical imports and exports from 2001 to 2018. A gravity model and panel data analysis were used, with EViews 10 as the software tool, and the data were collected from the World Bank and the International Trade Centre databases. The results show that the gravity model exhibits high explanatory power for Romanian pharmaceutical imports and exports. Market size, health expenditures of partner countries, sharing a common border, EU membership, as well as former CMEA (Council for Mutual Economic Assistance) ties, have a positive impact on import and export flows, while geographical and economic distance have a negative impact on Romanian pharmaceutical trade. The profiles of the major suppliers of Romanian pharmaceutical imports and the major destination countries for Romanian pharmaceutical exports are identified. The paper provides valuable insight into Romanian pharmaceutical trade, showing that the main macroeconomic determinants of imports are the share of pharmaceutical exports in total exports and the export market penetration index for the partner country, while the main determinants of exports are the share of pharmaceutical imports in total imports and the trade openness of the partner country. The paper addresses only macroeconomic determinants of Romanian pharmaceutical trade flows; therefore, further research on micro-level determinants is needed.

Data:
Received: 22 Mar 2021
Revised: 5 May 2021
Accepted: 6 Jun 2021
Published: 20 Jun 2021