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Distance, Globalization, and International Trade

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Listed author(s):
  • 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.

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Paper provided by LeBow College of Business, Drexel University in its series School of Economics Working Paper Series with number 2016-8.

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Length: 16 pages
Date of creation: 11 Jul 2016
Handle: RePEc:ris:drxlwp:2016_008
Contact details of provider: Web page: http://www.lebow.drexel.edu/

More information through EDIRC

Keywords: Distance Puzzle; Missing Globalization; Structural Gravity; Poor Countries;

Other versions of this item:

Find related papers by 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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  1. James E Anderson, James E; Yotov, Yoto V., 2010. "Specialisation: Pro and Anti-Globalizing 1990-2002," CAGE Online Working Paper Series 15, Competitive Advantage in the Global Economy (CAGE).
  2. Baldwin, Richard & Taglioni, Daria, 2006. "Gravity for Dummies and Dummies for Gravity Equations," CEPR Discussion Papers 5850, C.E.P.R. Discussion Papers.
  3. 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.
  4. James E. Anderson & Eric van Wincoop, 2004. "Trade Costs," Journal of Economic Literature, American Economic Association, vol. 42(3), pages 691-751, September.
  5. Yotov, Yoto V., 2012. "A simple solution to the distance puzzle in international trade," Economics Letters, Elsevier, vol. 117(3), pages 794-798.
  6. James E. Anderson & Eric van Wincoop, 2003. "Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, American Economic Association, vol. 93(1), pages 170-192, March.
  7. Head, Keith & Mayer, Thierry, 2014. "Gravity Equations: Workhorse,Toolkit, and Cookbook," Handbook of International Economics, Elsevier.
  8. Mario Larch & Yoto V. Yotov, 2016. "General Equilibrium Trade Policy Analysis with Structural Gravity," CESifo Working Paper Series 6020, CESifo Group Munich.
  9. Hervé Boulhol & Alain de Serres, 2010. "Have developed countries escaped the curse of distance?," Journal of Economic Geography, Oxford University Press, vol. 10(1), pages 113-139, January.
  10. Céline Carrère & Jaime de Melo & John Wilson, 2013. "The Distance Puzzle And Low-Income Countries: An Update," Journal of Economic Surveys, Wiley Blackwell, vol. 27(4), pages 717-742, 09.
  11. Mayer, Thierry & Zignago, Soledad, 2006. "Notes on CEPII’s distances measures," MPRA Paper 26469, University Library of Munich, Germany.
  12. J. M. C. Santos Silva & Silvana Tenreyro, 2006. "The Log of Gravity," The Review of Economics and Statistics, MIT Press, vol. 88(4), pages 641-658, November.
  13. Lin, Faqin & Sim, Nicholas C.S., 2012. "Death of distance and the distance puzzle," Economics Letters, Elsevier, vol. 116(2), pages 225-228.
  14. Buch, Claudia M. & Kleinert, Jorn & Toubal, Farid, 2004. "The distance puzzle: on the interpretation of the distance coefficient in gravity equations," Economics Letters, Elsevier, vol. 83(3), pages 293-298, June.
  15. Costinot, Arnaud & Rodríguez-Clare, Andrés, 2014. "Trade Theory with Numbers: Quantifying the Consequences of Globalization," Handbook of International Economics, Elsevier.
  16. Anderson, James & Vesselovsky, Mykyta & Yotov, Yoto, 2014. "Gravity with Scale Economies," School of Economics Working Paper Series 2014-4, LeBow College of Business, Drexel University.
  17. Baier, Scott & Yotov, Yoto & Zylkin, Thomas, 2016. "On the widely differing effects of free trade agreements: Lessons from twenty years of trade integration," School of Economics Working Paper Series 2016-15, LeBow College of Business, Drexel University.
  18. Céline Carrère & Maurice Schiff, 2005. "On the Geography of Trade. Distance is Alive and Well," Revue économique, Presses de Sciences-Po, vol. 56(6), pages 1249-1274.
  19. Dai, Mian & Yotov, Yoto & Zylkin, Thomas, 2013. "On the Trade-diversion Effects of Free Trade Agreements," School of Economics Working Paper Series 2013-3, LeBow College of Business, Drexel University, revised 15 Sep 2014.
  20. Rikhil Bhavnani & Natalia T. Tamirisa & Arvind Subramanian & David T. Coe, 2002. "The Missing Globalization Puzzle," IMF Working Papers 02/171, International Monetary Fund.
  21. 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.
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Cited by:

  1. 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.
  2. Baier, Scott & Kerr, Amanda & Yotov, Yoto, 2017. "Gravity, Distance, and International Trade," School of Economics Working Paper Series 2017-5, LeBow College of Business, Drexel University.

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