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Patterns and Determinants of International Trade Costs in the Food Industry

  • Alessandro Olper
  • Valentina Raimondi

This paper documents patterns in international trade costs in processed foods for a large cross-section of developing and developed countries, during the 1976-2000 period. A trade costs index is inferred from a micro-founded gravity equation that incorporates bilateral `iceberg?trade costs. For 2000, the weighted average tariff equivalent of trade costs ranges from 73% for the North to 134% for the South countries. The time patterns show an average reduction of about -13% in the observed period, that rises to -26% for the Emerging countries. However, the same does not apply for South countries. On ranking the trade costs determinants we find that, on average, geographical and historical factors seem to dominate those of infrastructure and institutions. However, trade policy emerges as an important determinant of the North-Emerging trade costs. Finally we find strong evidence that demand-side considerations also matter to explain trade costs.

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Paper provided by LICOS - Centre for Institutions and Economic Performance, KU Leuven in its series LICOS Discussion Papers with number 18807.

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Length: 28 pages
Date of creation: 2007
Date of revision:
Handle: RePEc:lic:licosd:18807
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  1. James E. Anderson & Douglas Marcouiller, S.J., 1999. "Insecurity and the Pattern of Trade: An Empirical Investigation," Boston College Working Papers in Economics 418, Boston College Department of Economics, revised 03 Aug 2000.
  2. David Hummels, 2007. "Transportation Costs and International Trade in the Second Era of Globalization," Journal of Economic Perspectives, American Economic Association, vol. 21(3), pages 131-154, Summer.
  3. de Sousa, J. & Mayer, T. & Zignago, S., 2011. "Market access in global and regional trade," Working papers 358, Banque de France.
  4. Keith Head & Thierry Mayer, 2004. "Non-Europe : the magnitude and causes of market fragmentation in the EU," Cahiers de la Maison des Sciences Economiques bla99004a, Université Panthéon-Sorbonne (Paris 1).
  5. James E. Anderson & Eric van Wincoop, 2000. "Gravity with Gravitas: A Solution to the Border Puzzle," Boston College Working Papers in Economics 485, Boston College Department of Economics.
  6. Lionel Fontagné & Thierry Mayer & Soledad Zignago, 2005. "Trade in the Triad: how easy is the access to large markets?," Sciences Po publications info:hdl:2441/10189, Sciences Po.
  7. Alessandro Olper & Valentina Raimondi, 2007. "Market access asymmetry in food trade," LICOS Discussion Papers 18707, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
  8. McCallum, John, 1995. "National Borders Matter: Canada-U.S. Regional Trade Patterns," American Economic Review, American Economic Association, vol. 85(3), pages 615-23, June.
  9. Arnim Kuhn, 2005. "A CGE analysis of trade costs in the Russian agrofood sector," Agricultural Economics, International Association of Agricultural Economists, vol. 33(1), pages 79-90, 07.
  10. 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.
  11. Daniel Berkowitz & Johannes Moenius & Katharina Pistor, 2006. "Trade, Law, and Product Complexity," The Review of Economics and Statistics, MIT Press, vol. 88(2), pages 363-373, May.
  12. repec:spo:wpecon:info:hdl:2441/10189 is not listed on IDEAS
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