Gravity models have been successful

Gravity models have been successful empirically as a result of their resistance to the study of various
inter-regional flws, although until recently they have not had strong theoretical foundations. James
Anderson (1979) and Bergstrand (1985) provide the fist theoretical justifiations to the model by
including resistance factors to trade such as multilateral prices, transportation costs and other costs
borne by consumers. More recently, Anderson and Van Wincoop (2003) have measured the impact
of the “border effect” in the volume of trade between border provinces in the U.S. and Canada.
Through these various studies, the authors have tempted to provide answers on the determinants
of trade bilateral flws. Baier and Bergstrand (2001) concluded that the growth of international
trade over the last forty years is explained approximately at 69% by growth in real GDP, 26% by
reduction of tariff barriers and preferential trade agreements and at 9 % by transportation cost.