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Distance, Globalization, and International Trade

Author

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  • Borchert, Ingo

    () (University of Sussex)

  • Yotov, Yoto

    () (Drexel University)

Abstract

We offer a robust solution to the distance puzzle in international trade within the structural gravity framework. Then we obtain country-specific estimates of the effects of distance on trade. We find that the effects of globalization on manufacturing trade over the period 1986-2006 are non-monotonic across country income groups. The biggest winners from globalization are countries in the middle of the world income distribution. Advanced economies in our sample have enjoyed gains too; however, according to our estimates, low income countries have not nearly benefitted from globalization as much as middle income countries. The estimated country-specific changes in distance effects are correlated systematically with variables commonly identified as globalization forces.

Suggested Citation

  • Borchert, Ingo & Yotov, Yoto, 2016. "Distance, Globalization, and International Trade," School of Economics Working Paper Series 2016-8, LeBow College of Business, Drexel University.
  • Handle: RePEc:ris:drxlwp:2016_008
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    2. Dorothee Hillrichs & Gonzague Vannoorenberghe, 2021. "Trade costs, home bias and the unequal gains from trade," LIDAM Discussion Papers IRES 2021005, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    3. Murshed, Muntasir & Rashid, Seemran, 2020. "An Empirical Investigation of Real Exchange Rate Responses to Foreign Currency Inflows: Revisiting the Dutch Disease phenomenon in South Asia," MPRA Paper 98756, University Library of Munich, Germany.
    4. Theresa M. Greaney & Kozo Kiyota, 2020. "The gravity model and trade in intermediate inputs," The World Economy, Wiley Blackwell, vol. 43(8), pages 2034-2049, August.
    5. Lanz, Rainer & Lee, Woori & Stolzenburg, Victor, 2019. "Distance, formal and informal institutions in international trade," WTO Staff Working Papers ERSD-2019-03, World Trade Organization (WTO), Economic Research and Statistics Division.
    6. Scott L. Baier & Amanda Kerr & Yoto V. Yotov, 2018. "Gravity, distance, and international trade," Chapters, in: Bruce A. Blonigen & Wesley W. Wilson (ed.), Handbook of International Trade and Transportation, chapter 2, pages 15-78, Edward Elgar Publishing.
    7. Silviano Esteve-Pérez & Salvador Gil-Pareja & Rafael Llorca-Vivero & Jordi Paniagua, 2021. "Has the Euro paid off? A study of the trade-induced welfare effects of the EMU," Working Papers 2103, Department of Applied Economics II, Universidad de Valencia.
    8. Piermartini, Roberta & Yotov, Yoto, 2016. "Estimating Trade Policy Effects with Structural Gravity," School of Economics Working Paper Series 2016-10, LeBow College of Business, Drexel University.
    9. R.M. Ammar ZAHID & Aurelia ILIEȘ, 2018. "The Impact Of Eastern European Culture On The International Trade," EURINT, Centre for European Studies, Alexandru Ioan Cuza University, vol. 5, pages 120-135.
    10. MORIKAWA Masayuki, 2018. "Effects of Distance and Borders on International and Interregional Tourist Flows: A micro-gravity analysis," Discussion papers 18021, Research Institute of Economy, Trade and Industry (RIETI).
    11. Michael Pfaffermayr, 2020. "Trade creation and trade diversion of economic integration agreements revisited: a constrained panel pseudo-maximum likelihood approach," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 156(4), pages 985-1024, November.
    12. Adam, Marc Christopher, 2019. "Return of the tariffs: The interwar trade collapse revisited," Discussion Papers 2019/8, Free University Berlin, School of Business & Economics.
    13. Silviano Esteve‐Pérez & Salvador Gil‐Pareja & Rafael Llorca‐Vivero & José Antonio Martínez‐Serrano, 2020. "EMU and trade: A PPML re‐assessment with intra‐national trade flows," The World Economy, Wiley Blackwell, vol. 43(10), pages 2574-2599, October.
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    More about this item

    Keywords

    Distance Puzzle; Missing Globalization; Structural Gravity; Poor Countries;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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