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Distance, Globalization, and International Trade

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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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    References listed on IDEAS

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    Cited by:

    1. 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.
    2. 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.
    3. 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.
    4. 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.
    5. 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.
    6. 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).
    7. Adam, Marc Christopher, 2019. "Return of the tariffs: The interwar trade collapse revisited," Discussion Papers 2019/8, Free University Berlin, School of Business & Economics.

    More about this item

    Keywords

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

    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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