Has Distance Died? Evidence from a Panel Gravity Model

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

No 3500, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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 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.

Keywords: Globalization; Transport costs; Distance; Panel gravity model (search for similar items in EconPapers)
JEL-codes: F12 (search for similar items in EconPapers)
Date: 2002-08
New Economics Papers: this item is included in nep-geo
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (45)

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Related works:
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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