| dc.description.abstract | Taiwan has a small open economy. As Taiwan has limited resources and is surrounded by the sea, its economic development is dependent on international trade. Promoting Taiwan’s international trade becomes an increasingly important issue in recent years. This research uses the gravity model to study the bilateral trade flow relationships between Taiwan and its trading partners from 2004 to 2008. Specifically, it investigates the impact of the trading partners’ characteristics on Taiwan’s import and export volume. These characteristics includes: volume of manufacturing output, Gross Domestic Product per capita (GDP per capita), liner shipping connectivity index (LSCI), exchange rate and geographic distance from Taiwan. The research also discusses the flow of trade between Taiwan and its major partners, China, United States, Japan, Hong Kong, South Korea and Singapore.
Panel data analysis shows that trading partners’ GDP per capita and LSCI have significant positive influence on Taiwan’s trade flow. Export countries’ manufacturing output and LSCI have significant positive impact on Taiwan’s export flow. Import countries’ GDP per capita and LSCI have significant positive impact on Taiwan’s import flow. Exchange rate has significant negative impact on Taiwan’s trade and export flow, but positive impact on Taiwan’s import flow. Distance has significant negative impact on Taiwan’s trade, export and import flows. Base on the results, the research suggests ways to improve trade between Taiwan and its major trading partners.
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