Abstract:

This paper examines structure and geographical distribution of Venezuela’s international trade by means of applying basic and extended gravity models to the country’s exports to 35 partners in 2000-2018. Model testing revealed that better performance of the extended gravity model was achieved thanks to higher qualitative characteristics secured by additional variables. GDP, participation in the same integration block, membership in Petrocaribe program, and import of crude oil made positive contribution to bilateral trade. Whereas, distance, access to the open sea, the economic policy of developed countries, and sanctions had negative impact. It is assumed that trade flows were affected by dire economic crisis and western sanctions, which led to a sharp decrease both in exports and imports in 2014-2018. Owing to strong influence of political factors, the models failed to perform effectively. Finally, the study provides some suggestions on measures which could benefit Venezuela’s foreign trade given the circumstances.