Study the Agricultural Market Convergence in the D8 and G7 Countries: Gravity Model Approach

This paper aims to evaluate and compare the convergence of market agricultural products in D8 and G7 countries using gravity model during 1995-2012. According to results, the gravity model explains about 79 and 96 percent of the agricultural sector trade arrangements between D8 and G7Countries, respectively. The results also showed that the estimated coefficient of added value variable in agricultural sector of i and j countries in G7 and D8 groups is positive. Estimated Linder coefficient index is not significant for G7 countries but was significant and positive for D8 countries. Estimated population index of the country i is significant and equals to - 3.25, and 1.69 for D8 G7 countries which is not significant. Estimated population index of country i for D8 and G7 countries are 0.69 and 0.41 respectively. The estimated exchange rate coefficient of country i for the G7 and D8 groups is positive and significant while the estimated exchange rate coefficients of country j is negative for both groups of countries.