Distance Decay in International Trade Patterns - a Meta-analysis
Trade costs remain an important barrier to international trade in today’s globalizing economy. Despite the popular discussion on the “death of distance”, distance is still an important source of trade costs and continues to have an irrevocable impact on the patterns of international trade. The literature identifies various factors that can explain the importance of geographical proximity for bilateral trade. First, transport costs and costs of timeliness increase with distance. Moreover, psychic distance increases as well. Because of cultural unfamiliarity and information costs, traders have less knowledge of distant markets. Empirical estimates of the distance effect in trade abound. The evidence indicates that distance still matters for trade. However, differences in estimated effects across the literature make generalizations about the distance effect and its development over time more difficult. This paper performs a meta-analysis of existing empirical studies of bilateral trade, in order to contribute to our understanding of distance decay in trade. Meta-analysis is a statistical analysis of a set of existing empirical results in a specific research area, in order to integrate the findings. It constitutes a quantitative survey of the literature that explicitly addresses the causes of cross-study variation in empirical outcomes. To perform the meta-analysis, a sample of gravity studies was constructed that is as representative as possible. For this purpose, a literature search has been conducted on the Internet, using the Econlit database. Using the search string “trade and/or distance, and gravity, in all fields”, a list of 214 applicable studies has been identified. From this list, 30 studies were randomly selected into the meta-analysis sample. The paper focuses on two key issues. First, it investigates cross-estimate variation in the distance effect according to differences in, e.g., time period concerned, data type used, or empirical specification and estimation method used. Then, we analyse whether the impact of distance has declined over time.
|Date of creation:||Aug 2005|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.ersa.org
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.:
- Fukuda, Shin-ichi & Hoshi, Takeo & Ito, Takatoshi & Rose, Andrew, 2006. "International Finance," Journal of the Japanese and International Economies, Elsevier, vol. 20(4), pages 455-458, December.
- Claudia M. Buch & Jörn Kleinert & Farid Toubal, 2003.
"The Distance Puzzle: On the Interpretation of the Distance Coefficient in Gravity Equations,"
Kiel Working Papers
1159, Kiel Institute for the World Economy.
- 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.
- Claudia Buch & Jörn Kleinert & Farid Toubal, 2004. "The Distance Puzzle: On the Interpretation of the Distance Coefficient in Gravity Equations," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00311582, HAL.
- James E. Anderson & Eric van Wincoop, 2004.
NBER Working Papers
10480, National Bureau of Economic Research, Inc.
- Edward E. Leamer & James Levinsohn, 1994.
"International Trade Theory: The Evidence,"
NBER Working Papers
4940, National Bureau of Economic Research, Inc.
- 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.
- 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.
- James E. Anderson & Eric van Wincoop, 2001. "Gravity with Gravitas: A Solution to the Border Puzzle," NBER Working Papers 8079, National Bureau of Economic Research, Inc.
- James E. Rauch, 2001. "Business and Social Networks in International Trade," Journal of Economic Literature, American Economic Association, vol. 39(4), pages 1177-1203, December.
- Trefler, Daniel, 1995. "The Case of the Missing Trade and Other Mysteries," American Economic Review, American Economic Association, vol. 85(5), pages 1029-46, December.
- T. D. Stanley, 2001. "Wheat from Chaff: Meta-analysis as Quantitative Literature Review," Journal of Economic Perspectives, American Economic Association, vol. 15(3), pages 131-150, Summer.
- Jeffrey A. Frankel, 1997. "Regional Trading Blocs in the World Economic System," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 72.
- Jean-François BRUN & Céline CARRERE & Patrick GUILLAUMONT & Jaime MELO DE, 2002.
"Has Distance Died? Evidence from a Panel Gravity Model,"
- Jean-François Brun & Céline Carrère & Patrick Guillaumont & Jaime de Melo, 2005. "Has Distance Died? Evidence from a Panel Gravity Model," World Bank Economic Review, World Bank Group, vol. 19(1), pages 99-120.
- Brun, Jean-François & Carrère, Céline & de Melo, Jaime & Guillaumont, Patrick, 2002. "Has Distance Died? Evidence from a Panel Gravity Model," CEPR Discussion Papers 3500, C.E.P.R. Discussion Papers.
- Alan V. Deardorff, 2014.
"Local comparative advantage: Trade costs and the pattern of trade,"
International Journal of Economic Theory,
The International Society for Economic Theory, vol. 10(1), pages 9-35, 03.
- Alan V Deardorff, 2004. "Local Comparative Advantage: Trade Costs and the Pattern of Trade," Working Papers 500, Research Seminar in International Economics, University of Michigan.
- Smith, V Kerry & Huang, Ju-Chin, 1995. "Can Markets Value Air Quality? A Meta-analysis of Hedonic Property Value Models," Journal of Political Economy, University of Chicago Press, vol. 103(1), pages 209-27, February.
- Rauch, James E., 1999.
"Networks versus markets in international trade,"
Journal of International Economics,
Elsevier, vol. 48(1), pages 7-35, June.
- Gorg, Holger & Strobl, Eric, 2001. "Multinational Companies and Productivity Spillovers: A Meta-analysis," Economic Journal, Royal Economic Society, vol. 111(475), pages F723-39, November.
- Card, David & Krueger, Alan B, 1995. "Time-Series Minimum-Wage Studies: A Meta-analysis," American Economic Review, American Economic Association, vol. 85(2), pages 238-43, May.
When requesting a correction, please mention this item's handle: RePEc:wiw:wiwrsa:ersa05p679. 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: (Gunther Maier)
If references are entirely missing, you can add them using this form.