What drives the Halal Food and Beverage Trade? A Gravity Model Investigation

- By Hamid, Baharom Abdul ; Charoenchang, Chariyawat ; Dewandaru, Ginanjar ; Islam, Muhammad Umar


The study aimed to determine the antecedents or drivers of the Halal food and beverage trade. The Halal F&B statistics were manually derived by applying the Shariah principle of "presumption of permissibility" and the WTO assumption when assigning HS codes on the specific trade concerns database to determine the approximate value of Halal F&B trade between countries, which is an important contribution of this study. We utilized the gravity model of international trade and the Poisson-Pseudo-Maximum Likelihood (PPML) approach, which is the gravity model's commonly suggested estimator. The examined samples include bilateral trade data from 59 nations (20 OIC members) between 2007 and 2016. The tested determinants are the variables of the economy, distance, level of income, exchange rate, regional trade agreement, common border, common language, colonial relationship, and landlocked commerce. Results indicate that the economic size of trade partners, regional trade agreements, shared borders, and common language significantly positively impact the value of Halal F&B exports. In contrast, distance, exporting nation income, exchange rate, and landlocked trade significantly negatively impact. Meanwhile, it appeared that neither the income level of the importing country nor its colonial relationship had a substantial impact on commerce.