Working Paper: CEPR ID: DP9085
Authors: Jos de Sousa; Thierry Mayer; Soledad Zignago
Abstract: This paper develops a method to measure difficulties in market access over a large set of industries and countries (both developing and developed), during the period 1980-2006. We use a micro-founded heterogeneous-consumers model to estimate the impact of national borders on global and regional trade flows. Results show that difficulties faced by developing countries' exporters in accessing developed markets are 50\% higher than those faced by Northern exporters. These difficulties have however experienced a noticeable fall since 1980 in all industries. It is twenty three times easier to enter Northern and Southern markets for a Southern country exporter in 2006 than in 1980. Expressed in tariff-equivalent, the level of protection implied when crossing a border fell from 180 to 89\% for this same sample. While tariffs still have an influence on trade patterns, they do not seem to explain an important part of the border effect. Last, our theory-based measure offers a renewal of the assessment of the impact of regional trading arrangements. The EU, NAFTA, ASEAN and MERCOSUR agreements all tend to reduce the estimated degree of market fragmentation within those zones, with the expected ranking between their respective trade impact.
Keywords: border effects; distances; gravity; market access; north-south trade; regional integration; tariffs; trade costs
JEL Codes: F12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| difficulties faced by developing countries' exporters in accessing developed markets (F63) | significantly higher than those faced by northern exporters (F14) |
| tariff equivalent of protection when crossing borders fell (F14) | from 180 to 89 (Y10) |
| difficulties faced by southern exporters in entering northern markets (F14) | decreased since 1980 (J11) |
| while tariffs still affect trade patterns (F14) | do not explain a large part of the border effect (F55) |
| regional trade agreements tend to reduce market fragmentation (F15) | varying impacts across different agreements (F53) |