IDEAS home Printed from https://ideas.repec.org/a/gam/jecomi/v13y2025i6p174-d1679560.html

The Impact of Trade with Border Effect on GDP per Capita: Global Evidence

Author

Listed:
  • Hansen Tandra

    (Research Centre for Macroeconomics and Finance, National Research and Innovation Agency, Jl. Gatot Subroto No 10, Jakarta 12710, Indonesia)

  • I Gusti Ayu Putu Mahendri

    (Research Centre for Macroeconomics and Finance, National Research and Innovation Agency, Jl. Gatot Subroto No 10, Jakarta 12710, Indonesia)

  • Sujianto Sujianto

    (Research Centre for Macroeconomics and Finance, National Research and Innovation Agency, Jl. Gatot Subroto No 10, Jakarta 12710, Indonesia)

  • Bahtiar Rifai

    (Research Centre for Macroeconomics and Finance, National Research and Innovation Agency, Jl. Gatot Subroto No 10, Jakarta 12710, Indonesia)

  • Zamroni Salim

    (Research Centre for Macroeconomics and Finance, National Research and Innovation Agency, Jl. Gatot Subroto No 10, Jakarta 12710, Indonesia)

  • Helena da Silva

    (Research Centre for Macroeconomics and Finance, National Research and Innovation Agency, Jl. Gatot Subroto No 10, Jakarta 12710, Indonesia)

  • Yulia Pujiharti

    (Research Centre for Macroeconomics and Finance, National Research and Innovation Agency, Jl. Gatot Subroto No 10, Jakarta 12710, Indonesia)

Abstract

Many countries worldwide share borders that offer several benefits, such as easier access, faster knowledge transfer, and more efficient trade diplomacy. However, reliance on land-border trade alone has not been consistently shown to increase GDP per capita or vice versa. This study investigates the relationship between trade and GDP per capita by distinguishing trade between land-border countries and non-land-border countries. The analysis applied two-stage least squares (2SLS) estimation using data from 87 countries with land borders covering 2010 to 2021. The share of trade to land and non-land borders around the world was dominated by China, Germany, and the United States, with a share of more than 10%. The results revealed a negative relationship between trade with land-border countries and GDP per capita, while trade with non-land-border countries showed a positive effect. To enhance the benefits of land-border trade, improving governance and infrastructure are essential to sustain its impacts in the future.

Suggested Citation

  • Hansen Tandra & I Gusti Ayu Putu Mahendri & Sujianto Sujianto & Bahtiar Rifai & Zamroni Salim & Helena da Silva & Yulia Pujiharti, 2025. "The Impact of Trade with Border Effect on GDP per Capita: Global Evidence," Economies, MDPI, vol. 13(6), pages 1-18, June.
    • Handle: RePEc:gam:jecomi:v:13:y:2025:i:6:p:174-:d:1679560
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2227-7099/13/6/174/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2227-7099/13/6/174/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Bilal Lotfi & Mohamed Karim, 2017. "Export Diversification and Economic Growth in Morocco: An Econometric Analysis," Applied Economics and Finance, Redfame publishing, vol. 4(6), pages 27-35, November.
    2. Sayef Bakari & Mohamed Mabrouki, 2017. "The Effect Of Agricultural Exports On Economic Growth In South-Eastern Europe: An Empirical Investigation Using Panel Data," Journal of Smart Economic Growth, , vol. 2(4), pages 49-64, December.
    3. Gerald Ngoma & Burcu Berke, 2020. "What determines import demand in Zimbabwe? Evidence from a gravity model," Cogent Economics & Finance, Taylor & Francis Journals, vol. 8(1), pages 1782129-178, January.
    4. Pratistha Gyawali, 2024. "Estimating the landlocked penalty for international trade," The World Economy, Wiley Blackwell, vol. 47(6), pages 2220-2235, June.
    5. Hyunsoo KANG, 2015. "Agricultural exports and economic growth: Empirical evidence from the major rice exporting countries," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 61(2), pages 81-87.
    6. Giorgia Bressan, 2017. "Power, Mobility and the Economic Vulnerability of Borderlands," Journal of Borderlands Studies, Taylor & Francis Journals, vol. 32(3), pages 361-377, July.
    7. Carolyn L. Evans, 2003. "The Economic Significance of National Border Effects," American Economic Review, American Economic Association, vol. 93(4), pages 1291-1312, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bakari, Sayef, 2024. "Assessing the Impact of Domestic Investments and CO2 Emissions on Economic Growth in Sub-Saharan Africa: A Comprehensive Study (1990-2022)," MPRA Paper 120370, University Library of Munich, Germany.
    2. Besedes, Tibor & Prusa, Thomas J., 2006. "Product differentiation and duration of US import trade," Journal of International Economics, Elsevier, vol. 70(2), pages 339-358, December.
    3. Tejada, O. & Álvarez-Mozos, M., 2018. "Graphs and (levels of) cooperation in games: Two ways how to allocate the surplus," Mathematical Social Sciences, Elsevier, vol. 93(C), pages 114-122.
    4. James Harrigan, 2001. "Specialization and the Volume of Trade: Do the Data Obey the Laws?," NBER Working Papers 8675, National Bureau of Economic Research, Inc.
    5. Salvador Gil-Pareja & Rafael Llorca & Josè A. Martinez-Serrano, 2011. "Is There A Continental Bias In Trade?," ERSA conference papers ersa10p792, European Regional Science Association.
    6. Do, Quy-Toan & Levchenko, Andrei A., 2007. "Comparative advantage, demand for external finance, and financial development," Journal of Financial Economics, Elsevier, vol. 86(3), pages 796-834, December.
    7. James E. Anderson & Eric van Wincoop, 2004. "Trade Costs," Journal of Economic Literature, American Economic Association, vol. 42(3), pages 691-751, September.
    8. Wolf, Nikolaus, 2009. "Was Germany Ever United? Evidence from Intra- and International Trade, 1885–1933," The Journal of Economic History, Cambridge University Press, vol. 69(3), pages 846-881, September.
    9. Mkadmi, Jamel Eddine & Bakari, Sayef & Msai, Achwak, 2021. "Assessing the Impact of Tax Policies on Economic Growth in Tunisia: New Empirical and Policy Analysis," MPRA Paper 109023, University Library of Munich, Germany.
    10. Jingchen You & Zhiqiang Pang & Xijuan Niu & Yize Zhang, 2025. "Measurement of the Modernization of Rural Governance Capacity: A Systematic Perspective," Sustainability, MDPI, vol. 17(16), pages 1-33, August.
    11. Festus Ebo Turkson, 2011. "Logistics and Bilateral Exports in Developing Countries: A Multiplicative Form Estimation of the Logistics Augmented Gravity Equation," Discussion Papers 11/06, University of Nottingham, CREDIT.
    12. Rebecca Hellerstein, 2005. "A Decomposition of the Sources of Incomplete Cross-Border Transmission," 2005 Meeting Papers 805, Society for Economic Dynamics.
    13. Koenig, Pamina & Poncet, Sandra, 2019. "Social responsibility scandals and trade," World Development, Elsevier, vol. 124(C), pages 1-1.
    14. Salvador Gil‐Pareja & Rafael Llorca‐Vivero & José A. Martínez‐Serrano & Josep Oliver‐Alonso, 2005. "The Border Effect in Spain," The World Economy, Wiley Blackwell, vol. 28(11), pages 1617-1631, November.
    15. Roberta Capello & Andrea Caragliu & Ugo Fratesi, 2018. "Compensation modes of border effects in cross‐border regions," Journal of Regional Science, Wiley Blackwell, vol. 58(4), pages 759-785, September.
    16. Do, Quy-Toan & Levchenko, Andrei A. & Raddatz, Claudio, 2016. "Comparative advantage, international trade, and fertility," Journal of Development Economics, Elsevier, vol. 119(C), pages 48-66.
    17. Enrique Martínez García, 2008. "Globalization and monetary policy: an introduction," Globalization Institute Working Papers 11, Federal Reserve Bank of Dallas.
    18. Bakari, Sayef & Fakraoui, Nissar & Mabrouki, Mohamed, 2020. "The Contribution of Domestic Investment, Exports and Imports on Economic Growth: A Case Study of Peru," MPRA Paper 99041, University Library of Munich, Germany.
    19. Ihle, Rico & von Cramon-Taubadel, Stephan & Zorya, Sergiy, 2010. "Country and border effects in the transmission of maize prices in Eastern Africa: evidence from a semi-parametric regression model," 2010 AAAE Third Conference/AEASA 48th Conference, September 19-23, 2010, Cape Town, South Africa 96184, African Association of Agricultural Economists (AAAE).
    20. Gianluca Cafiso, 2011. "Sectoral border effects and the geographic concentration of production," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 147(3), pages 543-566, September.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jecomi:v:13:y:2025:i:6:p:174-:d:1679560. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.