The Uneven Impact of Continental Boundaries on Trade

This paper investigates the existence of a continental bias in world trade and the potential differences in this bias across continents and at trade margins. We find a moderate positive continental bias in trade that masks an uneven impact of continental boundaries across continents. At the intensive margin, South America and Africa present a robust negative continental bias, Asia a robust positive one, and North America and Europe a positive or no bias depending on the estimation procedure. Differences also appear for the extensive margin of trade. In particular, the probability of trade is positive for countries in the Americas and Africa. Copyright Springer Science+Business Media New York 2015