Understanding the Republic of Malawi’s trade dynamics: A Bayesian gravity model approach

International trade enables countries to expand their markets, access more products, improve resource allocation, and boost economic growth by leveraging comparative advantage and specialization. The aim of this article is to analyze the primary factors that influence Malawi’s international trade flows. The study is relevant because it examines Malawi’s trade patterns with its main partners, which include surrounding nations and traditional trade allies. The novelty is that, through the analysis, the research offers valuable insights into the primary factors that influence Malawi’s international commerce. Panel data is gathered from various sources, including the International Monetary Fund (IMF) and World Bank, covering the period from 2000 to 2023 for 11 countries that are trading partners with Malawi. We employ the Bayesian Mindsponge gravity methodology. The results show that the economic size (characterized by the gross domestic product) of the origin and destination countries, bilateral agreements, and the population size of the destination country have a beneficial impact on Malawi’s exports. In conclusion, Malawi’s export performance is significantly enhanced by the economic size of both Malawi and its trading partners, the existence of bilateral agreements, and the population size of the destination countries, underscoring the importance of strategic economic partnerships and targeted trade policies in boosting Malawi’s international trade. We recommend Malawi authorities focus on strengthening bilateral agreements and targeting trade relationships with larger and more populous economies to boost international trade.

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