Trade Relations Between Mauritius and China: A Gravity Model Approach

Abstract

Trade between Mauritius and China has been increasing at a rapid pace. As there are only few studies about Sino-Mauritian trade, there is therefore a need to study the determinants affecting trade flows between the two countries. This paper uses the “Gravity Model” with a sample data of 23 years (1997–2019) to analyze the trade between Mauritius and China. The results show that GDP’s growth rate, exchange rate, and FDI both have significant effects on Mauritian trade; however the former has a positive effect while the latter two has a negative one. The economic mass of the two countries have promoted trade, while an appreciation in Chinese currency and large amounts of direct investment have on the other side hindered Mauritian trade. A concrete trade agreement between the two sides can help in reducing the costs of trade between the two countries and improve the situation.