Distance, globalization, and international trade

Borchert, Ingo and Yotov, Yoto (2017) Distance, globalization, and international trade. Economics Letters, 153. pp. 32-38. ISSN 0165-1765

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Abstract

For a long time globalization could be seen everywhere but in gravity estimates. We offer evidence how globalization affects manufacturing trade over the period 1986-2006 and show that, on average, the effect of distance has fallen whereas the effects of proximity and regional trade
agreements have increased over time. We also document substantial cross-country heterogeneity in the extent to which distance elasticities have changed. Countries in the middle of the per-capita income distribution have seen the steepest fall in distance coeffcients. At the same time, distance as a trade friction has not lost its bite for a number of low income countries, which may jeopardize their integration into global markets. We present suggestive evidence that the heterogeneous change in distance elasticities is related to secular shifts in the composition of exports.

Item Type: Article
Keywords: Distance Puzzle, Missing Globalization, Structural Gravity, Poor Countries.
Schools and Departments: School of Business, Management and Economics > Economics
Subjects: H Social Sciences > HF Commerce > HF1040 Commodities. Commercial products
Depositing User: Ingo Borchert
Date Deposited: 11 Sep 2017 08:39
Last Modified: 20 Sep 2017 08:02
URI: http://sro.sussex.ac.uk/id/eprint/70074

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