An Analysis of Trading Table Grapes among Peru and Asian Country Members of APEC using Gravity Model

This study assesses the export of fresh grape from Peru to its ten major importers in the Asia-Pacific Economic Cooperation (APEC) in the Asian region during 2003-2012, using a gravity model. The situation of the fresh grape industry in Peru and the world is revised taking in account different variables relevant in the gravity equation; such as, GDP of Peru and APEC countries, distance between countries, tariffs, free trade agreements (FTAs) and plantations in the APEC countries. The econometric methodology used in this study controls for zero trades among countries; specifically for the cases of China, South-Korea and Taiwan and heteroskedasticity by using PPML estimator at a 6 level Harmonized System (HS) 6-digit data 080610 fresh grapes. Results suggest that increases of the GDP of Peru by 1% increases exports by 2.3%; on the other hand, tariffs imposed to Peru by 1% to reduce its exports by 10.9%.ACKNOWLEDGEMENTS II ABSTRACT III TABLE OF CONTENTS IV LIST OF TABLES VI LIST OF FIGURES 1 CHAPTER I: INTRODUCTION 1 1.1. Motivation of the study 1 1.2 Objectives of the Study 7 CHAPTER II: OVERVIEW OF WORLD´S TABLE GRAPES 9 2.1 Types of grapes in the world 9 2.2 Fresh grape production and trade in the world 10 CHAPTER III: PERU´S TABLE GRAPE OVERVIEW 16 3.1 Economy 16 3.2 Agriculture of Peru 17 3.3 History of the grape production in Peru 19 3.4 Major export varieties 21 3.5 Production 22 CHAPTER IV: LITERATURE REVIEW 32 4.1 Literature on gravity model 32 CHAPTER V: METHODOLOGY 36 5.1 Gravity Model framework 36 5.2 Empirical Specifications 39 5.3 Empirical model 41 CHAPTER VI: DATA AND EMPIRICAL RESULTS 45 6.1 Data 45 6.2 Estimated results and discussion 49 CHAPTER VII: CONCLUSIONS 54 7.1 Peruvian Agricultural export Analysis 54 7.2 Recommendations 54 REFERENCES 5