A Gravity Model for Indonesian Canned Tuna Exports to the European Union Market: An Application of PPML Estimator

Abstract

In this study, we examine the factors that affect the export of Indonesian canned tuna to the European Union (EU) market through a gravity model approach. This paper employs a gravity model approach through Poisson Pseudo-Maximum Likelihood (PPML) estimation. Data from 2006 to 2015 covering 10 countries in the EU market (Netherlands, Belgium, Italy, Germany, Poland, Portugal, Slovenia, Spain, Sweden, and the United Kingdom) were employed with HS 160414 product code specifications. Constant Market Share Analysis (CMSA) was performed to examine Indonesian export growth as well as its competitors. The findings indicated that the performance of Indonesian canned tuna exports to the EU market is prominently affected by competitiveness effect while Thai canned tuna export is more affected by the import growth effect and composition effect. The Philippines and Vietnam canned tuna exports are more affected by composition effect and competitiveness effect. The factors that significantly affect the export of Indonesian canned tuna to the EU market are the population of the importing countries, tuna production volumes and real exchange rate.