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

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  • Inmaculada Martinez-Zarzoso
  • Celestino Suarez-Burguet

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.

Suggested Citation

  • Inmaculada Martinez-Zarzoso & Celestino Suarez-Burguet, 2005. "Transport costs and trade: Empirical evidence for Latin American imports from the European union," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 14(3), pages 353-371.
  • Handle: RePEc:taf:jitecd:v:14:y:2005:i:3:p:353-371
    DOI: 10.1080/09638190500212121
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    References listed on IDEAS

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    Cited by:

    1. Borchert, Ingo & Mattoo, Aaditya, 2016. "The trade reducing effects of restrictions on liner shippingAuthor-Name: Bertho, Fabien," Journal of Comparative Economics, Elsevier, vol. 44(2), pages 231-242.
    2. Craig Macphee & Peter Cook & Wanasin Sattayanuwat, 2013. "Transportation and The International Trade of Eastern and Southern Africa," South African Journal of Economics, Economic Society of South Africa, vol. 81(2), pages 225-239, June.
    3. Harald Oberhofer & Michael Pfaffermayr, "undated". "FDI versus Exports. Substitutes or Complements? A Three Nation Model and Empirical Evidence," Working Papers 2007-28, Faculty of Economics and Statistics, University of Innsbruck.
    4. 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.
    5. Inmaculada Martinez-Zarzoso & Felicitas D. Nowak-Lehmann, 2007. "Is distance a good proxy for transport costs? The case of competing transport modes," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 16(3), pages 411-434.
    6. Benedictis Villacreses, Geovanna & Calfat, Germán & Flôres Jr., Renato G., 2006. "Challenging the pro-development role of trade agreements when remoteness counts: the Ecuadorian experience," IOB Working Papers 2006.05, Universiteit Antwerpen, Institute of Development Policy (IOB).
    7. repec:got:cegedp:54 is not listed on IDEAS
    8. Sami Bensassi & Laura Márquez-Ramos & Inmaculada Martínez-Zarzoso, 2012. "Economic Integration and the Two Margins of Trade: The Impact of the Barcelona Process on North African Countries' Exports," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 21(2), pages 228-265, March.
    9. Gabriel FIGUEIREDO DE OLIVEIRA & Nicolas PERIDY, 2015. "L’Impact Des Coûts A L’Échange Sur Le Commerce Des Pays Mena: Le Rôle Des Couts Directs Et Indirects Liés Au Transport Maritime," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 41, pages 125-147.
    10. Gordon Wilmsmeier & Inmaculada Martínez-Zarzoso, 2009. "Determinants of maritime transport costs -- a panel data analysis for Latin American trade," Transportation Planning and Technology, Taylor & Francis Journals, vol. 33(1), pages 105-121, October.
    11. Inmaculada Martínez-Zarzoso & Sami Bensassi, 2013. "The Price Of Modern Maritime Piracy," Defence and Peace Economics, Taylor & Francis Journals, vol. 24(5), pages 397-418, October.
    12. Jordan Schwartz & José Luis Guasch & Gordon Wilmsmeier, 2009. "Logistics, Transport and Food Prices in LAC: Policy Guidance for Improving Efficiency and Reducing Costs," IDB Publications (Working Papers) 9324, Inter-American Development Bank.
    13. Ozlem Yaylaci, 2012. "Evolution of Trade Costs," EcoMod2012 4267, EcoMod.
    14. De Oliveira, Gabriel Figueiredo, 2014. "Determinants of European freight rates: The role of market power and trade imbalance," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 62(C), pages 23-33.
    15. Laura Márquez-Ramos & Inmaculada Martínez-Zarzoso & Eva Pérez-García & Gordon Wilmsmeier, 2011. "“Special Issue on Latin-American Research” Maritime Networks, Services Structure and Maritime Trade," Networks and Spatial Economics, Springer, vol. 11(3), pages 555-576, September.
    16. Inmaculada Martínez-Zarzoso & Gordon Wilmsmeier, 2010. "Freight Rates and the Margins of Intra-Latin American Maritime Trade," Ibero America Institute for Econ. Research (IAI) Discussion Papers 201, Ibero-America Institute for Economic Research.
    17. Jordan Schwartz & José Luis Guasch & Gordon Wilmsmeier, 2009. "Logistics, Transport and Food Prices in LAC: Policy Guidance for Improving Efficiency and Reducing Costs," IDB Publications (Working Papers) 2541, Inter-American Development Bank.

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