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Bilateral Protection and Other Determinants of Trade: A Gravity Model Approach

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  • Vollrath, Thomas L.
  • Gehlhar, Mark J.
  • Hallahan, Charles B.

Abstract

Border protection is thought to be a major impediment to trade, especially in agriculture. There are also many other forces shaping the global network of partner trade. This study uses the generalized gravity framework to distinguish among the different drivers of trade. The analysis focuses on dyadic determinants that either resist or aid partner trade in total merchandise and in selected agricultural markets. The global dataset used consists of bilateral trade among 70 countries in 1986, 1996, 2000, and 2004. Collectively, the 70 countries account for 85 percent of the world’s cross-border trade in agriculture and 96 percent of its GDP. Empirical results lend support to the Heckscher-Ohlin explanation of trade, namely that relative factor endowments motivate cross-border trade. The results also show that tariff protection has not had an appreciable effect on either total merchandise or aggregate agricultural trade. However, trade in specific agricultural goods, such as meat and rice, was found to be severely constrained by the presence of bilateral tariffs.

Suggested Citation

  • Vollrath, Thomas L. & Gehlhar, Mark J. & Hallahan, Charles B., 2007. "Bilateral Protection and Other Determinants of Trade: A Gravity Model Approach," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon 9804, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea07:9804
    DOI: 10.22004/ag.econ.9804
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    References listed on IDEAS

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