The Landlockedness as Determinant of Bilateral Trade Flow
DOI:
https://doi.org/10.35319/lajed.20183012Keywords:
Landlockedness, cloistered country, bilateral trade flow, gravity equation, transport costsAbstract
This paper analyses the main variables which explain the behavior of bilateral trade flows. Special attention is payed to landlockedness, a geographic variable that characterizes to almost 25 percent of all countries around the world. Through a panel data composed by 10712 bilateral trade flows corresponding to 104 countries in the period 2006-2015, 107120 observations got available for the econometric model. The estimations were run in the framework of gravity equation. The results showed the signs expected theoretically. In the specific case of landlockedness, it was found that countries with this characteristic, lose about 15 percent of their trade flows. The cause of this loss can be found in what Adam Smith called “border crossings”, which raise the transport costs of good exported or imported. Finally, in a specific study about Bolivia, a cloistered country and not a landlocked one, it was calculated that in the analyzed period, the loss due not counting with sea coasts represented about 11.7 percent of its Gross Domestic Product.
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