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On the Geography of Trade: Distance is Alive and Well

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Author Info
Céline CARRERE () (Centre d'Etudes et de Recherches sur le Développement International)
Maurice SCHIFF () (Banque mondiale)

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Abstract

It has been widely argued that, with the decline in trade costs, the importance of distance has declined over time. On the other hand, most gravity models find that the importance of distance has increased over time. This puzzle has not been satisfactorily explained and is examined here. The paper develops a new measure of the distance of trade (DOT) and shows that the DOT falls over the period 1962-2000 for the average country in the world, with the number of countries with declining DOT about double those with increasing DOT. This implies an increased importance of distance over time. The paper shows how this can be true despite declining trade costs. The paper also analyzes the impact on the DOT of changes in production, customs and domestic transport costs, in real exchange rates and in competition. Finally, the paper provides an empirical analysis of the evolution of the DOT and explains most of its negative trend.

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Paper provided by CERDI in its series Working Papers with number 200423.

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Length: 41
Date of creation: 2004
Date of revision:
Handle: RePEc:cdi:wpaper:634

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Related research
Keywords: Distance; Geography of Trade; Regionalization.; Trade costs;

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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.:
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  3. David Hummels & Dana Rapoport & Kei-Mu Yi, 1998. "Vertical specialization and the changing nature of world trade," Economic Policy Review, Federal Reserve Bank of New York, issue Jun, pages 79-99. [Downloadable!]
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    Other versions:
  5. Dollar, David & Micco, Alejandro & Clark, Ximena, 2002. "Maritime transport costs and port efficiency," Policy Research Working Paper Series 2781, The World Bank. [Downloadable!]
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    Other versions:
  9. Andrew K. Rose, 1991. "Why Has Trade Grown Faster than Income?," Canadian Journal of Economics, Canadian Economics Association, vol. 24(2), pages 417-27, May. [Downloadable!] (restricted)
    Other versions:
  10. Edward L. Glaeser & Janet E. Kohlhase, 2003. "Cities, Regions and the Decline of Transport Costs," NBER Working Papers 9886, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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    Other versions:
  15. Gallup, J.L. & Sachs, J.D. & Mullinger, A., 1999. "Geography and Economic Development," Papers 1, Chicago - Graduate School of Business.
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    Other versions:
  17. Edward Glaeser & Janet Kohlhase, 2003. "Cities, regions and the decline of transport costs," Economics of Governance, Springer, vol. 83(1), pages 197-228, October. [Downloadable!] (restricted)
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  22. John Luke Gallup & Jeffrey D. Sachs & Andrew Mellinger, 1999. "Geography and Economic Development," CID Working Papers 1, Center for International Development at Harvard University. [Downloadable!]
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  24. 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)
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  26. Kevin H. O'Rourke & Jeffrey G. Williamson, 2000. "When Did Globalization Begin?," NBER Working Papers 7632, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  27. Rikhil Bhavnani & David T. Coe & Arvind Subramanian & Natalia T. Tamirisa, 2002. "The Missing Globalization Puzzle," IMF Working Papers 02/171, International Monetary Fund. [Downloadable!]
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  30. Edward L. Glaeser & Janet E. Kohlhase, 2003. "Cities, Regions and the Decline of Transport Costs," Harvard Institute of Economic Research Working Papers 2014, Harvard - Institute of Economic Research. [Downloadable!]
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    Other versions:
Full references

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. de Melo, Jaime & Grether, Jean-Marie & Mathys, Nicole Andréa, 2007. "Trade, Technique and Composition Effects: What is Behind the Fall in World-wide SO2 Emissions, 1990-2000?," CEPR Discussion Papers 6522, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  2. Cortes, Maria, 2007. "Composition of Trade between Australia and Latin America: Gravity Model," Economics Working Papers wp07-19, School of Economics, University of Wollongong, NSW, Australia. [Downloadable!]
  3. Claus-Friedrich Laaser & Klaus Schrader, 2004. "The Baltic States' Integration into the European Division of Labour," Kiel Working Papers 1234, Kiel Institute for the World Economy. [Downloadable!]
  4. Cortes, Maria, 2007. "Examining Patterns of Bilateral Trade between Australia and Colombia by Using Cointegration Analysis and Error-Correction Models," Economics Working Papers wp07-20, School of Economics, University of Wollongong, NSW, Australia. [Downloadable!]
  5. Mauricio Cárdenas SantaMaría & Camilo García Jimeno, 2004. "El modelo gravitacional y el TLC entre Colombia y Estados Unidos," WORKING PAPERS SERIES. DOCUMENTOS DE TRABAJO 002527, FEDESARROLLO. [Downloadable!]
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