Trade Costs and Trade Composition

17 Pages Posted: 7 May 2013

See all articles by Chris Milner

Chris Milner

University of Nottingham - School of Economics

Danny McGowan

University of Nottingham

Multiple version iconThere are 2 versions of this paper

Date Written: July 2013

Abstract

In this paper, we investigate whether countries' trade costs act like other national endowments by affecting the composition of countries' exports. Using an econometric approach that controls for endogeneity by accounting for potentially relevant omitted variables, we find strong evidence for a sample of 37 industrialized and transition countries that national trade costs systematically affect the composition of trade and can be viewed therefore as a source of comparative advantage. Industries located in countries with low trade costs capture significantly higher shares of world exports, where this effect is stronger in trade cost intensive industries.

JEL Classification: F11, F14

Suggested Citation

Milner, Chris and McGowan, Danny, Trade Costs and Trade Composition (July 2013). Economic Inquiry, Vol. 51, Issue 3, pp. 1886-1902, 2013. Available at SSRN: https://ssrn.com/abstract=2261570 or http://dx.doi.org/10.1111/j.1465-7295.2012.00496.x

Chris Milner (Contact Author)

University of Nottingham - School of Economics ( email )

University Park
Nottingham, NG7 2RD
United Kingdom

Danny McGowan

University of Nottingham ( email )

University Park
Nottingham, NG8 1BB
United Kingdom

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