Skip to Main Navigation

Distance and regionalization of trade for low-income countries (Inglês)

The "distance effect" measuring the elasticity of trade flows to distance has been rising since the early 1970s in a host of studies based on the gravity model, leading observers to call it the "distance puzzle". This paper reviews the evidence and explanations. Using an extensive data set of 124 countries over the period 1970-2005, the authors confirm the existence of this puzzle and identify that it only applies to poor countries (the bottom third in per capita income terms in the sample -- i.e., the low-income countries according to the World Bank classification, 2006). The analysis shows that this group has intensified trade with closer partners and has chosen new partners that are closer than existing partners, leading to a regionalization of their trade at both extensive and intensive margins (regionalization of trade is absent for the other countries). Combining several methods on cross-section and panel estimates of the gravity equation, the authors estimate that low-income countries exhibit a significant rising distance effect on their trade, around 18 percent between 1970 and 2006. There is no more distance "puzzle" for trade within richer countries (the top third in per capita income terms in the sample). The paper disposes of several previous explanations of the puzzle, and notes that this regionalization could well be a reflection of increased integration of this group of countries in the world economy or greater marginalization.


  • Autor

    Carrere, Celine de Melo, Jaime Wilson, John

  • Data do documento


  • TIpo de documento

    Documento de trabalho sobre pesquisa de políticas

  • No. do relatório


  • Nº do volume


  • Total Volume(s)


  • País


  • Região

    Regiões Mundiais,

  • Data de divulgação


  • Disclosure Status


  • Nome do documento

    Distance and regionalization of trade for low-income countries

  • Palavras-chave

    trade costs;trade flow;econometric analysis of cross section;elasticity of substitution in consumption;average trade;elasticity of trade;impact of transport cost;Technical Barriers to Trade;gravity model;bilateral trade;country fixed effect;quality of infrastructure;volume of trade;principal component analysis;average distance;list of countries;bilateral trade flow;gravity equation;preferential tariff reduction;bilateral trade data;unit of measurement;panel data model;barrier to entry;panel data set;per capita income;cost of fuel;development research group;measure of trade;regional trade integration;preferential trade agreement;choice of mode;expansion of trade;tariff on import;change product;tariff import;terms of trade;regional trade agreement;ocean freight rate;degree of competition;pattern of trade;bilateral trade volume;quality and quantity;average production cost;condition of specialization;share of trade;health care utilization;direct foreign investment;rise and fall;determinants of trade;Learning and Innovation Credit;trading partner;common language;International Trade;trade partner;paved road;econometric method;railway network;telephone line;physical infrastructure;foreign trade;land area;potential trade;functional form;sample period;world trade;total trade;differentiated products;social infrastructure;empirical literature;transaction cost;missing observation;shipping price;weighted average;high trade;measurement error;robustness check;descriptive statistic;trade share;primary product;administrative cost;partner country;formal sector;sample selection;trade elasticity;distant partners;relative trade;fuel cost;richer countries;telecommunication sector;product variety;missing value;transportation sector;multilateral trade;infrastructure component;simple average;standard error;positive impact;monetary policy;transport service;production function;aggregate index;international economics;individual effect;trading volume;regression model;imf staff;comparative advantage;perfect substitute;international transportation;geographical disadvantage;trade pattern;Industrialized countries;industrialized country;empirical analysis;variable cost;test statistic;road density;informal sector;public good;home trade;international shipping;trade friction;empirical investigation;deep integration;trade diversion;vertical specialization;high correlation;corporate governance;railway density;linear regression;Political Economy;individual coefficient;international economy;infrastructure asset;beneficial trade;rail network;explanatory power;dependant variable;preceding section;trade datum;estimation procedure;increasing impact;firm entry;cross-section regression;average data;systems approach;import supplier;trade growth;raw data;adequate representation;cases reported;products export;standard approach;world production;cost minimization;world exports;trade structure;import data;customs authority;export data;trading pattern;utility function;random-effects specification;coefficient estimate;point estimate;internal trade;common colonizer;estimation method;road infrastructure;information barriers;contract cost;reduce trade;Agricultural Trade;cross-sectional evidence;contractual enforcement;tax equivalent;world economy;technological progress;high tariff;marginal effect;price index;product level;wage gap;market characteristic;transport prices;market power;transport carriers;storage cost;distribution cost;border trade;manufactured products;income coefficient;homogenous good;asian countries;previous one;ceteris paribus;transactions cost;aggregate trade;econometric problem;negative coefficient;linear approximation;endogeneity issue;instrumental variable;population variable;idiosyncratic error;welfare implication;increasing trade;border measure;missing data;homogenous product;positive coefficient;



Versão oficial do documento (pode conter assinaturas, etc.)

  • PDF oficial
  • TXT*
  • Total Downloads** :
  • Download Stats
  • *A versão do texto é um OCR incorreto e está incluído unicamente em benefício de usuários com conectividade lenta.