Recent Development in Infrastructure and Its Impact on Agricultural and Non-agricultural Trade
The main objective of this paper is to estimate the relationship between telecommunication and the volume of trade. More specifically, we estimate the effect of improved telecommunication on bilateral trade of agricultural and non-agricultural goods among the OECD countries in each year from 1997 to 2001.The results indicate that per capita GDPs, geographical sizes, and telecommunication investments in both exporting and importing countries are significant and positively related to the value of bilateral trade between them. In agricultural trade, the investment in telecommunication in importing countries is more important than that of exporting countries. The geographical size of the exporting country is more important in agricultural trade than that of the importing country; but it is not the case in non-agricultural trade. This indicates that land is one of essential factors in agricultural trade. In non-agricultural trade, telecommunication investment of the exporting country is more important than that of the importing country. Moreover, the size of the selling market (exporting country) is more important than that of the importing country, relative to non-agricultural trade. In addition, the distance between trading countries is significant and negatively related to the bilateral trade value. The other dummy variables, representing the EU, NAFTA, common language, and common border, are also significant and positively related to bilateral trade values.
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