The Impact of Bilateral Relations on Bilateral Trade

Feiyang Lv

doi:10.6981/FEM.202501_6(1).0009

Authors

Feiyang Lv

DOI:

https://doi.org/10.6981/FEM.202501_6(1).0009

Keywords:

Bilateral Relations; Bilateral Trade; GDELT Database.

Abstract

How do bilateral political relations affect trade between countries? This paper reviews the existing theoretical and empirical studies. By introducing the bilateral relationship index and bilateral trade volume data of China, Vietnam and Indonesia, it is found that the bilateral political relationship has an impact on bilateral trade, but the relationship between the two is not always consistent due to the influence of economic, social and other factors. At the same time, this paper also uses the monthly event data of China and 13 APEC member countries in the GDELT database from 2018 to 2022 to quantify the changes in bilateral relations between the two countries, and empirically analyzes the impact of changes in bilateral relations between China and APEC member countries on trade exchanges. The findings are as follows: First, the fluctuation of bilateral relations has a positive correlation with the total trade volume of the two countries, that is, the improvement of bilateral relations has a promoting effect on the trade volume of the two countries. Second, bilateral geographical distance has a significant impact on bilateral trade. Third, the market size of member countries has a very significant impact on the change of trade volume, but increasing the control variable of market size reduces the significance level of the impact of bilateral political relations on bilateral trade.

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