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Determinants of the Negative Impact of Being Landlocked on Trade: An Empirical Investigation Through the Central Asian Case

  • Ga�l Raballand

    ()

    (ROSES, Sorbonne University, 106-112 Boulevard de l'H�pital, 75013 Paris, France.)

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    In this paper, the impact of land-lockedness on trade is estimated for a panel database using a gravity approach. By first examining Central Asian economies, it appears that land-lockedness implies a high transport cost burden. In a second step, the impact of land-lockedness on trade has been measured using four measures of being landlocked: the first estimation is obtained by introducing a dummy variable, the second estimate uses the shortest distance between a land-locked country and the nearest major port facility, the third measure represents the number of borders with coastal countries and the fourth is the number of national borders crossed. From over 10,000 observations, using a sample of 46 countries over a 5-year period, we conclude that being landlocked would reduce trade by more than 80% when measured by a dummy variable. Using the Cheng and Wall econometric approach, we find that the four measures are confirmed empirically. Finally, evidence shows that the number of border-crossings, which implies a transport cost burden, can explain a major part of the extra cost of overland transport in comparison with maritime transport. Comparative Economic Studies (2003) 45, 520–536. doi:10.1057/palgrave.ces.8100031

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    Article provided by Palgrave Macmillan in its journal Comparative Economic Studies.

    Volume (Year): 45 (2003)
    Issue (Month): 4 (December)
    Pages: 520-536

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    Handle: RePEc:pal:compes:v:45:y:2003:i:4:p:520-536
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    1. Bougheas, Spiros & Demetriades, Panicos O. & Morgenroth, Edgar L. W., 1999. "Infrastructure, transport costs and trade," Journal of International Economics, Elsevier, vol. 47(1), pages 169-189, February.
    2. Egger, Peter, 2000. "A note on the proper econometric specification of the gravity equation," Economics Letters, Elsevier, vol. 66(1), pages 25-31, January.
    3. I-Hui Cheng & Howard J. Wall, 2005. "Controlling for heterogeneity in gravity models of trade and integration," Review, Federal Reserve Bank of St. Louis, issue Jan, pages 49-63.
    4. John Luke Gallup & Jeffrey D. Sachs & Andrew Mellinger, 1999. "Geography and Economic Development," CID Working Papers 1, Center for International Development at Harvard University.
    5. James E. Anderson & Douglas Marcouiller, 1999. "Trade, Insecurity, and Home Bias: An Empirical Investigation," NBER Working Papers 7000, National Bureau of Economic Research, Inc.
    6. Gallup, J.L. & Sachs, J.D. & Mullinger, A., 1999. "Geography and Economic Development," Papers 1, Chicago - Graduate School of Business.
    7. K. Smarzynska, Beata, 2001. "Does Relative Location Matter for Bilateral Trade Flows? An Extension of the Gravity Model," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 16, pages 379-398.
    8. MacKellar, Landis & Woergoetter, Andreas & Woerz, Julia, 2000. "Economic Development Problems of Landlocked Countries," Transition Economics Series 14, Institute for Advanced Studies.
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