The impact of Economic and Geographic indicators in Trade in OIC Countries (Using Gravity Model)

Present paper is an attempt to estimate the impact of Economic and Geographic indicators in trade among Islamic countries according to a bilateral trade model as Gravity model, and study the relationship between Economy, Geography and Trade in this way. Fixed effect version of the panel data estimation producer with OIC member country data spanning over the 2007–2012. The result of this research is as bellow: First; increases in Gross Domestic Product (GDP), population, the technology of importers (countries) and decreases in area of the countries and the exchange rate of importer enhance the trade among Muslim countries. Secondly, distance (as a geographical indicator) is not the only factor affecting trade but also this factor with other geographic criteria (area and population) and economic (GDP, exchange rate and technology) impact on trade. Thus economic and geographic indicators are the effective factors in improving trade among Muslim countries.