Has Distance Died? Evidence from a Panel Gravity Model

Jean Brun (), Celine Carrere, Jaime Melo de and Patrick Guillaumont ()
Authors registered in the RePEc Author Service: Jaime de Melo

No 200215, Working Papers from CERDI

Abstract: This paper reports panel gravity estimates of aggregate bilateral trade for 130 countries over the period 1962-96 in which the coefficient of distance is allowed to change over time. In a standard specification in which transport costs are proxied by distance only, it is found paradoxically that the absolute value of the elasticity of bilateral trade to distance has been significantly increasing.The result is attributed to a relatively larger decline in costs independent of distance (such as handling) than in distance-related costs (e.g. oil price). An extended version of the model that controls for these two factors eliminates this positive trend without reversing it. However, when the sample is split into two groups ("rich-rich" and "poor-poor"), the paradox is maintained for the "poor-poor" group. While not conclusive, these results are consistent with the view that poor countries may have been marginalized by the current wave of globalization.

Pages: 33
Date: 2002
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Citations: View citations in EconPapers (46)

Published in World Bank Economic Review, 2005, pages 99-120
Published in World Bank Economic Review

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Related works:
Chapter: Has Distance Died? Evidence from a Panel Gravity Model (2015)
Journal Article: Has Distance Died? Evidence from a Panel Gravity Model (2005)
Working Paper: Has Distance Died? Evidence from a Panel Gravity Model (2002)
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