Abstract

• The improvement of bilateral trade between countries is useful for economic growth and to fulfil people’s needs at the same time. Bilateral trade raises income levels and benefits for both countries. This paper examines the trade structure between Myanmar and some trade partner countries by applying the standard gravity model using panel data. Using the gravity model of international trade theory intends to explain the bilateral trade flows and patterns between two economies. The gravity model can explain Myanmar’s trade structure and flow completely with the outcomes in the model. GDP is active factor in evaluating Myanmar’s trade structure. The positive and significant coefficient of the TCI implies that a Heckscher–Ohlin presumption could be appropriate in explaining trade patterns. Trade flows are significantly dependent on the interindustry trade that comes from factor endowment difference. Foreign exchange rate instability might be serious effects on trade sector development and the nation’s trade value. In the past, bilateral trade between Myanmar and Western countries was quite weak, although neighboring countries are the most important trade partners for Myanmar. ASEAN countries trade far less with Myanmar and ASEAN dummy shows that Myanmar still needs to tie itself closer to ASEAN for trade improvement. The random effects model (REM) and Hausman test results show the verification of the empirical model.