Declining Distance Effects in International Trade: Some Country‐Level Evidence

12 Pages Posted: 13 Aug 2013

See all articles by Michael Bleaney

Michael Bleaney

University of Nottingham - School of Economics

Abelardo S. Neaves

IInstituto Nacional de Estadística y Geografía (INEGI)

Date Written: August 2013

Abstract

Technical progress can be expected to reduce transport costs over time, yet most studies of bilateral trade based on the gravity model find distance effects to be increasing rather than decreasing. We investigate countries' openness to international trade (the ratio of exports plus imports to GDP). We find that trade decreases with geographical remoteness, land area and lack of access to the sea, all of which are likely to be correlated with transport costs. In contrast to the results obtained with log‐linear models of bilateral trade, distance effects (remoteness and land area) have declined over time. Trade decreases with population density and increases with improvements in the terms of trade, investment and a more liberal trade policy.

Suggested Citation

Bleaney, Michael and Neaves, Abelardo S., Declining Distance Effects in International Trade: Some Country‐Level Evidence (August 2013). The World Economy, Vol. 36, Issue 8, pp. 1029-1040, 2013, Available at SSRN: https://ssrn.com/abstract=2309222 or http://dx.doi.org/10.1111/twec.12034

Michael Bleaney (Contact Author)

University of Nottingham - School of Economics ( email )

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Abelardo S. Neaves

IInstituto Nacional de Estadística y Geografía (INEGI)

Mexico

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