On the geography of trade : distance is alive and well

It has been widely argued that, with the decline in trade costs (for example, transport and communication costs), the importance of distance has declined over time. If so, this would be a boon for countries located far from the main centers of economic activity. The authors examine the evolution of countries'distance of trade (DOT) from 1962-2000. They find that the DOT falls over time for the average country in the world, and that the number of countries with declining DOT is close to double those with increasing DOT. Thus, distance has become more important over time for a majority of countries. The authors examine various hypotheses to explain this phenomenon. One conclusion is that the evolution of the DOT is unrelated to that of the overall trade costs but depends on the relative evolution of its components. The authors also examine the impact on the DOT of changes in production, customs, and domestic transport costs; air relative to land and ocean transport costs; competition, exchange rate policy, regional integration, uneven growth, and counter-season trade; and just-in-time inventory management. An interesting finding is that, though regional integration has a negative impact on the DOT, the countries forming trade blocs had a DOT that was growing faster or falling more slowly than that of excluded countries. The authors also offer some insights into how these changes may affect the home bias in consumption and the border effect.Trade Policy,Economic Theory&Research,Environmental Economics&Policies,Common Carriers Industry,Transport and Trade Logistics,Economic Theory&Research,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Common Carriers Industry,Trade Policy,Environmental Economics&Policies

Fiscal spending and economic performance : some stylized facts

This paper complements the cross-country approach by examining the correlates of growth acceleration in per capita gross domestic product around"significant"public expenditure episodes by reorganizing the data around turning points, or events. The authors define a growth event as an increase in average per capita growth of at least 2 percentage points sustained for 5 years. A fiscal event is an increase in the annual growth rate of primary fiscal expenditure of approximately 1 percentage point sustained for 5 years and not accompanied by an aggravation of the fiscal deficit beyond 2 percent of gross domestic product. These definitions of events are applied to a database of 140 countries (118 developing countries) for 1972-2005. After controlling for the growth-inducing effects of positive terms-of-trade shocks and of trade liberalization reform, probit estimates indicate that a growth event is more likely to occur in a developing country when surrounded by a fiscal event. Moreover, the probability of occurrence of a growth event in the years following a fiscal event is greater the lower is the associated fiscal deficit, confirming that success of a growth-oriented fiscal expenditure reform hinges on a stabilized macroeconomic environment (through a limited primary fiscal deficit).Public Sector Expenditure Analysis&Management,Fiscal Adjustment,Economic Conditions and Volatility,Debt Markets,Achieving Shared Growth

Regional integration and natural resources : who benefits ? evidence from MENA

This paper builds on theoretical predictions that show that gains from regional integration are unevenly distributed between resource rich and poor countries. It explores the effects of different integration schemes in the Middle East and North Africa. The results suggest that within the Pan Arab Free Trade Agreement, there is significant trade creation for resource poor countries associated with regional integration, and no evidence of trade diversion. In resource rich countries, however, there is evidence of pure trade diversion in both resource-rich/labor-abundant countries and resource-rich/labor-importing countries. This underscores the idea that regional integration can help to spread the benefits of unevenly distributed resource wealth among the region's economies.Free Trade,Trade Law,Trade Policy,Economic Theory&Research,Trade and Regional Integration

OECD imports : diversification of suppliers and quality search

This paper explores the evolution of OECD imports over time, measuring their concentration across origin countries at the product level. The authors find evidence of diversification followed, in the very last years of the sample period (post-2000), by a slight re-concentration. This re-concentration is entirely explained by the growing importance of Chinese products in OECD imports. They also find evidence of relatively more volatile concentration levels for goods with high quality heterogeneity, with temporary phases of re-concentration on goods with higher unit values. Both findings are consistent with a simple model of adverse selection and quality screening by OECD buyers predicting that diversification happens by"bouts"rather than continuously, with temporary re-concentration on higher-quality suppliers.Markets and Market Access,Microfinance,Labor Policies,E-Business,Agribusiness&Markets

Distance and regionalization of trade for low-income countries

The"distance effect"measuring the elasticity of trade flows to distance has been rising since the early 1970s in a host of studies based on the gravity model, leading observers to call it the"distance puzzle". This paper reviews the evidence and explanations. Using an extensive data set of 124 countries over the period 1970-2005, the authors confirm the existence of this puzzle and identify that it only applies to poor countries (the bottom third in per capita income terms in the sample -- i.e., the low-income countries according to the World Bank classification, 2006). The analysis shows that this group has intensified trade with closer partners and has chosen new partners that are closer than existing partners, leading to a regionalization of their trade at both extensive and intensive margins (regionalization of trade is absent for the other countries). Combining several methods on cross-section and panel estimates of the gravity equation, the authors estimate that low-income countries exhibit a significant rising distance effect on their trade, around 18 percent between 1970 and 2006. There is no more distance"puzzle"for trade within richer countries (the top third in per capita income terms in the sample). The paper disposes of several previous explanations of the puzzle, and notes that this regionalization could well be a reflection of increased integration of this group of countries in the world economy or greater marginalization.Transport Economics Policy&Planning,Economic Theory&Research,Free Trade,Common Carriers Industry,Emerging Markets

Weak Governments and Trade Agreements *

Abstract The recent theoretical literature on the determinants of trade agreements has stressed the importance of political gains, such as credibility, as a rationale for trade agreements. The empirical literature, however, has lagged behind in the estimation of the economic gains or losses associated with these politically motivated trade agreements. This paper fills that gap by providing estimates of the economic impact of politically and economically motivated trade agreements. We find that credibility gains play a role in increasing the probability of two countries signing an agreement. Moreover, agreements with a stronger political motivation are more trade creating than agreements that are signed for pure market access / economic reasons. JEL classification numbers: F13, F15, D72

Whole-genome landscape of Medicago truncatula symbiotic genes

This Whole Genome Shotgun project has been deposited at DDBJ/ENA/GenBank under the accession PSQE00000000.International audienc