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Transport costs and trade: Empirical evidence for Latin American imports from the European union

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Author Info
Inmaculada Martínez-Zarzoso
Celestino Suárez-Burguet

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Abstract

This paper aims to investigate the relationship between trade flows and transport costs. In previous studies the cost of transport was considered as an exogenous variable. However, an expanding volume of trade also reduces the unit cost of transport and, therefore, the causal relationship between trade and transport costs may be operating in both directions. A transport-costs equation is estimated using data on transportation costs from the International Transport Data Base (BTI). The relationship between transport costs and trade is then analysed by applying a gravity model for sectoral imports for five Latin American Countries from the European Union. We investigate the endogeneity of the transport cost and trade variables by estimating simultaneously both equations. Our results show that, while higher distance and poor importer's infrastructure notably increase transport costs, a higher volume of trade has the opposite effect. Moreover, trade is significantly deterred by higher transport costs and fostered by cultural similarities.

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Publisher Info
Article provided by Taylor and Francis Journals in its journal Journal of International Trade & Economic Development.

Volume (Year): 14 (2005)
Issue (Month): 3 (September)
Pages: 353-371
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Handle: RePEc:taf:jitecd:v:14:y:2005:i:3:p:353-371

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Related research
Keywords: Transport costs; trade; infrastructure; imports sectors;

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Rauch, James E., 1999. "Networks versus markets in international trade," Journal of International Economics, Elsevier, vol. 48(1), pages 7-35, June. [Downloadable!] (restricted)
    Other versions:
  2. Dollar, David & Micco, Alejandro & Clark, Ximena, 2002. "Maritime transport costs and port efficiency," Policy Research Working Paper Series 2781, The World Bank. [Downloadable!]
  3. Bergstrand, Jeffrey H, 1989. "The Generalized Gravity Equation, Monopolistic Competition, and the Factor-Proportions Theory in International Trade," The Review of Economics and Statistics, MIT Press, vol. 71(1), pages 143-53, February. [Downloadable!] (restricted)
  4. Baier, Scott L. & Bergstrand, Jeffrey H., 2001. "The growth of world trade: tariffs, transport costs, and income similarity," Journal of International Economics, Elsevier, vol. 53(1), pages 1-27, February. [Downloadable!] (restricted)
  5. Bergstrand, Jeffrey H, 1985. "The Gravity Equation in International Trade: Some Microeconomic Foundations and Empirical Evidence," The Review of Economics and Statistics, MIT Press, vol. 67(3), pages 474-81, August. [Downloadable!] (restricted)
  6. James E. Anderson & Eric van Wincoop, 2000. "Gravity with Gravitas: A Solution to the Border Puzzle," Boston College Working Papers in Economics 485, Boston College Department of Economics. [Downloadable!]
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  7. Anderson, James E, 1979. "A Theoretical Foundation for the Gravity Equation," American Economic Review, American Economic Association, vol. 69(1), pages 106-16, March. [Downloadable!] (restricted)
  8. Limao, Nuno & Venables, Anthony J., 1999. "Infrastructure, geographical disadvantage, and transport costs," Policy Research Working Paper Series 2257, The World Bank. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Inmaculada Martínez-Zarzoso & Felicitas Nowak-Lehmann D., 2006. "Road and Maritime Transport Costs: A Comparative Analysis of Spanish Exports to Poland and Turkey," Ibero America Institute for Econ. Research (IAI) Discussion Papers 138, Ibero-America Institute for Economic Research. [Downloadable!]
  2. Harald Oberhofer & Michael Pfaffermayr, . "FDI versus Exports Substitutes or Complements? A Three Nations Model and Empirical Evidence," FIW Working Paper series 012, FIW. [Downloadable!]
    Other versions:
  3. Inmaculada Martínez-Zarzoso & Gordon Wilmsmeier, 2008. "Determinants of Maritime Transport Costs. A Panel Data Analysis for Latin American Trade," Ibero America Institute for Econ. Research (IAI) Discussion Papers 172, Ibero-America Institute for Economic Research. [Downloadable!]
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