A Heckscher-Ohlin Analysis of Philippine-Involved Bilateral Trade: Evidence from the Tinbergen Gravity Model

This study investigates Philippine-involved bilateral trade with 25 key partner countries—including the United States, Japan, China, Singapore, Hong Kong, South Korea, Thailand, Malaysia, Indonesia, Germany, the Netherlands, Vietnam, Saudi Arabia, Australia, France, the United Kingdom, India, the United Arab Emirates, Canada, the Russian Federation, Belgium, Italy, Brazil, Switzerland and Ireland—from 2011 to 2018. Anchored in the Heckscher-Ohlin (1933) theory and the Tinbergen Gravity Model (1962), the research assesses how factor endowments—capital, labor, and land—along with per capita GDP, population, remoteness, and trade agreements, correlate with trade flows. Through pooled ordinary least squares (OLS) regression, the results validate the Gravity Model, particularly with regard to remoteness and trade agreements. Partial support is found for the Heckscher-Ohlin theory, as GDP per capita, labor, and population aligned with expectancy, while capital and land deviated. The study demonstrates the nuanced nature of Philippine-involved bilateral trade and presents policy recommendations informed by the observed correlations.