North, South and Distance in the Gravity Model
It is generally assumed that distance in the gravity model strictly reflects frictions impedingbilateral trade. However, distances North-South could also reflect differences in factorendowment that provide opportunities for profitable trade. This paper investigates the hypothesisthat if we control for distance in the ordinary sense, differences North-South promoteinternational trade. The hypothesis receives ample support. Moreover, the significance of differencesNorth-South survives a battery of robustness tests, concerning period, distinctionsbetween differences in latitude North-North, North-South and South-South, and controls forother measures of differences in factor endowment, such as differences in per capita outputand differences in average temperature, rainfall, and seasonal range in temperature. The impactof differences North-South on bilateral trade has also been falling. This decline, in turn,might be partly responsible for the weakening of the influence of distance that has been occurringsince World War II. This last hypothesis receives confirmation as well. Finally, thepaper studies two country-specific aspects of distance: internal distance and remoteness. Itdoes so by examining the impact of both on the country fixed effects themselves: that is, thosethat emerged earlier. Internal distance turns out to have a far greater impact than remoteness –by an order of ten.
|Date of creation:||2005|
|Date of revision:|
|Contact details of provider:|| Postal: 15 Boulevard Gabriel Peri 92245 Malakoff Cedex|
Phone: 01 41 17 60 81
Web page: http://www.crest.fr
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Evenett, S. J. & Keller, W., 1994.
"On Theories Explaining the Success of the Gravity Equation,"
9713, Wisconsin Madison - Social Systems.
- Simon J. Evenett & Wolfgang Keller, 2002. "On Theories Explaining the Success of the Gravity Equation," Journal of Political Economy, University of Chicago Press, vol. 110(2), pages 281-316, April.
- Simon J. Evenett & Wolfgang Keller, 1998. "On Theories Explaining the Success of the Gravity Equation," NBER Working Papers 6529, National Bureau of Economic Research, Inc.
- Simon J. Evenett & Wolfgang Keller, 1996. "On Theories Explaining the Success of the Gravity Equation," International Trade 9608001, EconWPA, revised 13 Jun 1997.
- Rikhil Bhavnani & Natalia T. Tamirisa & Arvind Subramanian & David T. Coe, 2002. "The Missing Globalization Puzzle," IMF Working Papers 02/171, International Monetary Fund.
- Anne-Célia Disdier & Keith Head, 2008.
"The puzzling persistence of the distance effect on bilateral trade,"
- Anne-Célia Disdier & Keith Head, 2008. "The Puzzling Persistence of the Distance Effect on Bilateral Trade," The Review of Economics and Statistics, MIT Press, vol. 90(1), pages 37-48, February.
- Anne-Célia Disdier & Keith Head, 2004. "The Puzzling Persistence of the Distance Effect on Bilateral Trade," Development Working Papers 186, Centro Studi Luca d'Agliano, University of Milano.
- Céline Carrère & Maurice Schiff, 2005.
"On the Geography of Trade. Distance is Alive and Well,"
Presses de Sciences-Po, vol. 56(6), pages 1249-1274.
- Carrere, Celine & Schiff, Maurice, 2004. "On the geography of trade : distance is alive and well," Policy Research Working Paper Series 3206, The World Bank.
- Céline CARRERE & Maurice SCHIFF, 2004. "On the Geography of Trade: Distance is Alive and Well," Working Papers 200423, CERDI.
- Shang-Jin Wei, 1996. "Intra-National versus International Trade: How Stubborn are Nations in Global Integration?," NBER Working Papers 5531, National Bureau of Economic Research, Inc.
- Barry Eichengreen & Douglas A. Irwin, 1996.
"The Role of History in Bilateral Trade Flows,"
NBER Working Papers
5565, National Bureau of Economic Research, Inc.
- Jeffrey A. Frankel, 1997. "Regional Trading Blocs in the World Economic System," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 72, January.
- Hummels, David, 1999. "Toward a Geography of Trade Costs," GTAP Working Papers 1162, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
- Alan V. Deardorff, 1995.
"Determinants of Bilateral Trade: Does Gravity Work in a Neoclassical World?,"
NBER Working Papers
5377, National Bureau of Economic Research, Inc.
- Alan Deardorff, 1998. "Determinants of Bilateral Trade: Does Gravity Work in a Neoclassical World?," NBER Chapters, in: The Regionalization of the World Economy, pages 7-32 National Bureau of Economic Research, Inc.
- Deardorff, A.V., 1995. "Determinants of Bilateral Trade : Does Gravity Work in a Neoclassical World?," Papers 95-05, Michigan - Center for Research on Economic & Social Theory.
- Edward E. Leamer & James Levinsohn, 1994.
"International Trade Theory: The Evidence,"
NBER Working Papers
4940, National Bureau of Economic Research, Inc.
- Volker Nitsch, 2000. "National borders and international trade: evidence from the European Union," Canadian Journal of Economics, Canadian Economics Association, vol. 33(4), pages 1091-1105, November.
- Jonathan Eaton & Samuel Kortum, 2002. "Technology, Geography, and Trade," Econometrica, Econometric Society, vol. 70(5), pages 1741-1779, September.
- Thierry Mayer & Keith Head, 2002. "Illusory Border Effects: Distance Mismeasurement Inflates Estimates of Home Bias in Trade," Working Papers 2002-01, CEPII research center.
- David H. Romer & Jeffrey A. Frankel, 1999. "Does Trade Cause Growth?," American Economic Review, American Economic Association, vol. 89(3), pages 379-399, June.
- John F. Helliwell & Geneviève Verdier, 2001. "Measuring internal trade distances: a new method applied to estimate provincial border effects in Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 34(4), pages 1024-1041, November.
- Berthelon, Matias & Freund, Caroline, 2008.
"On the conservation of distance in international trade,"
Journal of International Economics,
Elsevier, vol. 75(2), pages 310-320, July.
- Berthelon, Matias & Freund, Caroline, 2004. "On the conservation of distance in international trade," Policy Research Working Paper Series 3293, The World Bank.
- Bergstrand, Jeffrey H, 1989. "The Generalized Gravity Equation, Monopolistic Competition, and the Factor-Proportions Theory in International Trade," The Review of Economics and Statistics, MIT Press, vol. 71(1), pages 143-53, February.
- Melitz, Jacques, 2008.
"Language and foreign trade,"
European Economic Review,
Elsevier, vol. 52(4), pages 667-699, May.
- Holger C. Wolf, 1997. "Patterns of Intra- and Inter-State Trade," NBER Working Papers 5939, National Bureau of Economic Research, Inc.
- James E. Anderson & Eric van Wincoop, 2004.
NBER Working Papers
10480, National Bureau of Economic Research, Inc.
- Holger C. Wolf, 2000. "Intranational Home Bias In Trade," The Review of Economics and Statistics, MIT Press, vol. 82(4), pages 555-563, November.
When requesting a correction, please mention this item's handle: RePEc:crs:wpaper:2005-11. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Florian Sallaberry)
If references are entirely missing, you can add them using this form.