European Regional Science Association
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European Regional Science Association
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The abstract for paper number 539:
Gert-Jan Linders, Henri L.F. De Groot, Department of Spatial Economics, Vrije Universiteit, Amsterdam, The Netherlands, Raymond Florax, Free University Amsterdam, Amsterdam, The Netherlands
Systematic Variation in the Impact of Distance on International Trade Paterns
There is an irrevocable impact of distance in explaining the patterns in international trade. This is one of the main conclusions emerging from empirical investigations of bilateral trade patterns. The literature identifies various factors that can explain the impact of geographical proximity on the intensity of bilateral trade flows, ranging from transport costs to cultural familiarity. Geographical distance can therefore best be viewed as a multi-dimensional concept. Tangible as well as intangible factors are likely to play a role in explaining the variation in the impact of distance that is established in the empirical literature estimating gravity models to identify distance effects. This paper performs a meta-analysis on existing empirical studies of bilateral trade in order to shed light on the ‘distance effect’. We focus on two key issues. First, we identify whether the impact of distance declines over time. Second, we investigate whether the distance effect varies systematically according to the control variables taken into account in the primary regression analysis.
Unfortunately full paper has not been submitted.