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Trade policy versus trade facilitation: An application using good old OLS

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  • Márquez-Ramos, Laura
  • Martínez-Zarzoso, Inmaculada
  • Suárez-Burguet, Celestino

Abstract

Trade policy barriers are only one element of overall trade costs. Among these, and due to the decrease in the influence of tariff barriers on trade over time, institutional barriers might increase in relative importance and become a key obstacle to the movements of goods across countries. This paper quantifies and compares the impact that a number of trade facilitation and trade policy barriers have on bilateral trade flows. A theoretically justified gravity model of trade is estimated by using the methodology proposed in Baier and Bergstrand (Bonus vetus OLS: A simple method for approximating international trade-cost effects using the gravity equation, 2009) for a cross-section of countries in the year 2000. Results indicate that institutional trade barriers have a greater impact on trade flows than tariff barriers. According to these findings, trade policy negotiation efforts should focus on facilitating trade processes and should be at the forefront of multilateral negotiations.

Suggested Citation

  • Márquez-Ramos, Laura & Martínez-Zarzoso, Inmaculada & Suárez-Burguet, Celestino, 2012. "Trade policy versus trade facilitation: An application using good old OLS," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 6, pages 1-38.
    • Handle: RePEc:zbw:ifweej:201211
    DOI: 10.5018/economics-ejournal.ja.2012-11
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    Cited by:

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    2. Natale, Fabrizio & Borrello, Alessandra & Motova, Arina, 2015. "Analysis of the determinants of international seafood trade using a gravity model," Marine Policy, Elsevier, vol. 60(C), pages 98-106.
    3. Patrik Karpaty & Patrik Tingvall, 2015. "Service Offshoring and Corruption: Do Firms Escape Corrupt Countries?," Journal of Industry, Competition and Trade, Springer, vol. 15(4), pages 363-381, December.
    4. Philippidis, G. & Resano, H. & Sanjuán, A.I., 2014. "Shifting Armington trade preferences: A re-examination of the Mercosur–EU negotiations," Economic Modelling, Elsevier, vol. 40(C), pages 21-32.
    5. Bensassi, Sami & Márquez-Ramos, Laura & Martínez-Zarzoso, Inmaculada & Suárez-Burguet, Celestino, 2015. "Relationship between logistics infrastructure and trade: Evidence from Spanish regional exports," Transportation Research Part A: Policy and Practice, Elsevier, vol. 72(C), pages 47-61.

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    More about this item

    Keywords

    tariff barriers; trade facilitation; sectoral trade;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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