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International trade and developing countries: an empirical investigation of the Linder hypothesis


  • Michael McPherson
  • Michael Redfearn
  • Margie Tieslau


This paper presents empirical evidence in support of the Linder hypothesis for five of the six East African developing countries studied here: Ethiopia, Kenya, Rwanda, Sudan and Uganda. This finding implies that these countries trade more intensively with others who have similar per capita income levels, as predicted by Linder. The contributions of this research are three-fold. First, new information is provided on the Linder hypothesis by focusing on developing countries. Second, this is one of very few analyses to capture both time-series and cross-section elements of the trade relationship by employing a panel data set. Third, the empirical methodology used in the analysis corrects a major shortcoming in the existing literature by using a censored dependent variable in estimation.

Suggested Citation

  • Michael McPherson & Michael Redfearn & Margie Tieslau, 2001. "International trade and developing countries: an empirical investigation of the Linder hypothesis," Applied Economics, Taylor & Francis Journals, vol. 33(5), pages 649-657.
  • Handle: RePEc:taf:applec:v:33:y:2001:i:5:p:649-657
    DOI: 10.1080/00036840122575

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    References listed on IDEAS

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    2. Doornik, Jurgen A & Hendry, David F & Nielsen, Bent, 1998. " Inference in Cointegrating Models: UK M1 Revisited," Journal of Economic Surveys, Wiley Blackwell, vol. 12(5), pages 533-572, December.
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    4. Johansen, Soren, 1995. "Likelihood-Based Inference in Cointegrated Vector Autoregressive Models," OUP Catalogue, Oxford University Press, number 9780198774501.
    5. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 39(3), pages 106-135.
    6. Banerjee, Anindya & Dolado, Juan J. & Galbraith, John W. & Hendry, David, 1993. "Co-integration, Error Correction, and the Econometric Analysis of Non-Stationary Data," OUP Catalogue, Oxford University Press, number 9780198288107.
    7. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
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    Cited by:

    1. Xuepeng Liu, 2009. "Trade and income convergence: Sorting out the causality," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 18(1), pages 169-195.
    2. repec:bla:afrdev:v:29:y:2017:i:2:p:139-154 is not listed on IDEAS
    3. Juan Carlos Hallak, 2010. "A Product-Quality View of the Linder Hypothesis," The Review of Economics and Statistics, MIT Press, vol. 92(3), pages 453-466, August.
    4. Juan Carlos Hallak, 2004. "Product Quality, Linder, and the Direction of Trade," NBER Working Papers 10877, National Bureau of Economic Research, Inc.
    5. Hallak, Juan Carlos, 2006. "Product quality and the direction of trade," Journal of International Economics, Elsevier, vol. 68(1), pages 238-265, January.
    6. Ari Kokko & Patrik Gustavsson Tingvall, 2014. "Distance, Transaction Costs, and Preferences in European Trade," The International Trade Journal, Taylor & Francis Journals, vol. 28(2), pages 87-120, June.
    7. Song, Nianfu & Aguilar, Francisco X. & Shifley, Stephen R. & Goerndt, Michael E., 2012. "Factors affecting wood energy consumption by U.S. households," Energy Economics, Elsevier, vol. 34(2), pages 389-397.
    8. Wongsurawat, Winai, 2007. "Determinants of public reactions to Concorde test flights at the John F. Kennedy International Airport," Journal of Air Transport Management, Elsevier, vol. 13(6), pages 371-375.
    9. Tania Georgia VICIU & Larisa MIHOREANU & Carmen COSTEA, 2016. "An Essay on the Applicability of the Linder Hypothesis in Determining the Patterns of the Romanian International Trade," Journal of Economic Development, Environment and People, Alliance of Central-Eastern European Universities, vol. 5(1), pages 52-62, March.
    10. Donny Tang, 2005. "Effects of the Regional Trading Arrangements on Trade: Evidence from the NAFTA, ANZCER and ASEAN Countries, 1989 - 2000," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 14(2), pages 241-265.
    11. Haq, Zahoor Ul & Meilke, Karl D., 2008. "Differentiated Agri-Food Product Trade and the Linder Effect," Working Papers 46629, Canadian Agricultural Trade Policy Research Network.
    12. Agostino, Mariarosaria & Trivieri, Francesco, 2014. "Geographical indication and wine exports. An empirical investigation considering the major European producers," Food Policy, Elsevier, vol. 46(C), pages 22-36.
    13. Kiyong Keum, 2010. "Tourism flows and trade theory: a panel data analysis with the gravity model," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 44(3), pages 541-557, June.
    14. Constantina Kottaridi, 2005. "The 'core-periphery' pattern of FDI-led growth and production structure in the EU," Applied Economics, Taylor & Francis Journals, vol. 37(1), pages 99-113.
    15. Bailey Klinger, 2009. "Is South–South Trade A Testing Ground For Structural Transformation?," UNCTAD Blue Series Papers 40, United Nations Conference on Trade and Development.

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