Professional article
Open access

Has distance died? Evidence from a panel gravity model

Published inThe World Bank economic review, vol. 19, no. 1, p. 99-120
Publication date2005

This paper reports panel gravity estimates of aggregate bilateral trade for 130 countries over the period 1962-96 in which the coefficient of distance is allowed to change over time. In a standard specification in which transport costs are proxied by distance only, it is found paradoxically that the absolute value of the elasticity of bilateral trade to distance has been significantly increasing.The result is attributed to a relatively larger decline in costs independent of distance (such as handling) than in distance-related costs (e.g. oil price). An extended version of the model that controls for these two factors eliminates this positive trend without reversing it. However, when the sample is split into two groups ("rich-rich" and "poor-poor"), the paradox is maintained for the "poor-poor" group. While not conclusive, these results are consistent with the view that poor countries may have been marginalized by the current wave of globalization.

  • Gravity model
  • Transport costs
  • Econometrics of panel data
Citation (ISO format)
CARRERE, Céline et al. Has distance died? Evidence from a panel gravity model. In: The World Bank economic review, 2005, vol. 19, n° 1, p. 99–120. doi: 10.1093/wber/lhi004
Main files (1)
Article (Accepted version)
ISSN of the journal0258-6770

Technical informations

Creation02/12/2015 4:06:00 PM
First validation02/12/2015 4:06:00 PM
Update time03/14/2023 10:50:14 PM
Status update03/14/2023 10:50:14 PM
Last indexation08/29/2023 2:46:57 PM
All rights reserved by Archive ouverte UNIGE and the University of GenevaunigeBlack