Patterns and Determinants of International Trade Costs in the Food Industry

LICOS Discussion Paper No. 188/2007

28 Pages Posted: 17 Mar 2008

See all articles by Alessandro Olper

Alessandro Olper

Università degli Studi di Milano; KU Leuven - Centre for Institutions and Economic Performance (LICOS)

Valentina Raimondi

Università degli Studi di Milano

Date Written: June 10, 2007

Abstract

This paper documents patterns in international trade costs in processed foods for a large cross-section of developing and developed countries, during the 1976-2000 period. A trade costs index is inferred from a micro-founded gravity equation that incorporates bilateral 'iceberg' trade costs. For 2000, the weighted average tariff equivalent of trade costs ranges from 73% for the North to 134% for the South countries. The time patterns show an average reduction of about -13% in the observed period, that rises to -26% for the Emerging countries. However, the same does not apply for South countries. On ranking the trade costs determinants we find that, on average, geographical and historical factors seem to dominate those of infrastructure and institutions. However, trade policy emerges as an important determinant of the North-Emerging trade costs. Finally we find strong evidence that demand-side considerations also matter to explain trade costs.

Keywords: Trade costs, Gravity, Processed Foods, Geography, Infrastructure, Trade Policy, Inequality

JEL Classification: F1, F13, F14

Suggested Citation

Olper, Alessandro and Raimondi, Valentina, Patterns and Determinants of International Trade Costs in the Food Industry (June 10, 2007). Available at SSRN: https://ssrn.com/abstract=1106106 or http://dx.doi.org/10.2139/ssrn.1106106

Alessandro Olper (Contact Author)

Università degli Studi di Milano ( email )

Via Celoria, 2
Milano, 20133
Italy
+390250316481 (Phone)
+390250316486 (Fax)

HOME PAGE: http://users.unimi.it/olper/

KU Leuven - Centre for Institutions and Economic Performance (LICOS) ( email )

Waaistraat 6 - box 3511
Leuven, 3000
Belgium

Valentina Raimondi

Università degli Studi di Milano ( email )

Via Festa del Perdono, 7
Milan, 20122
Italy

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