Working Paper: CEPR ID: DP2305
Authors: Anthony J. Venables; Nuno Limao
Abstract: We analyze the trade and production patterns of countries located at varying distances from an economic centre. Exports and imports of final and intermediate goods bear transport costs that increase with distance. We show how production and trade depend both on factor endowments and factor intensities, and on distance and the transport intensities of different goods. Countries divide into zones with different trade patterns, some export oriented and others import substituting. We study the implications of distance for factor prices and real incomes, the effects of changes in transport costs, and the locational choice of new activities.
Keywords: trade; specialization; transport costs
JEL Codes: F10
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Distance (R12) | Trade Volumes (F14) |
| Transport Costs (R41) | Trade Volumes (F14) |
| Distance (R12) | Transport Costs (R41) |
| Transport Costs (R41) | Trade Flows (F14) |
| Geography + Factor Endowments (R12) | Economic Zones (R38) |
| Economic Zones (R38) | Trade Patterns (F10) |
| Globalization (F60) | Incomes (D31) |
| Globalization (F60) | Terms of Trade for Non-Central Locations (R33) |
| Transport Intensity + Factor Intensity (F16) | Location of New Activities (Y80) |