ANALYZING THE IMPACT OF FREIGHT TRANSPORT, GDP, AND PESO – BAHT EXCHANGE RATE ON PHILIPPINE TRADE IN DESICCATED COCONUT USING THE GRAVITY MODEL OF INTERNATIONAL TRADE

Objective: The objective of this study is to investigate the impact of freight transport, Gross Domestic Product (GDP), and the Peso-Baht exchange rate on the trade of desiccated coconut between the Philippines and Thailand, utilizing the Gravity Model of International Trade. The primary aim is to understand the significant factors influencing the trade flow and to identify areas for improvement in international competitiveness. Theoretical Framework: The research is grounded in international trade theories, focusing on the Gravity Model, which emphasizes the roles of economic mass and geographical distance in determining trade flows. Method: This study made use of the ADF - Unit Root Test, Durbin – Watson Test, Jarque – Bera Test, Variance Inflationary Factor (VIF), Chow Breakpoint Test, Ramsey’s RESET, and Johansen Cointegration, to test the relationship between variables. Results and Discussion: The results of this study highlights the positive, yet insignificant effect of Thailand, and Philippines’ GDP on the trade in desiccated coconut. The exchange rate, and freight transport negatively impacts the trade, however, it is notable that only freight transport having a significant effect. Research Implications: The study provides insights into the logistical and economic challenges in the desiccated coconut trade, suggesting that addressing transportation inefficiencies and stabilizing exchange rates could enhance trade performance. Originality/Value: This study contributes to the literature by applying an innovative approach to desiccated coconut, revealing how logistical inefficiencies and economic variables affect trade flows and influence policy decisions. This research aids in enhancing trade efficiency between agricultural-exporting nations like the Philippines and Thailand.