Journal
EUROPEAN REVIEW OF AGRICULTURAL ECONOMICS
Volume -, Issue -, Pages -Publisher
OXFORD UNIV PRESS
DOI: 10.1093/erae/jbad038
Keywords
agricultural trade; distance; globalisation; home bias; intra-national distance
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This study uses structural gravity models to examine the impact of globalisation on distance in agricultural and processed food trade. The results show that larger internal distances lower domestic sales. The home bias effect is substantially larger in agricultural commodities compared to processed agricultural commodities. However, after controlling for relative intra-national trade costs and the home bias effect, globalisation does not lead to a smaller impact of distance on trade. Substantial heterogeneity exists when analysing individual commodities.
This study utilises structural gravity models to examine the impact of globalisation on distance in agricultural and processed food trade, the relative effects of international distance and home bias effects. The results show that larger internal distances lower domestic sales. The home bias effect is substantially larger in agricultural commodities compared to processed agricultural commodities. Omitted variable bias is observed in friction variables when the relative intra-national distance and home market bias are excluded. After controlling for relative intra-national trade costs and the home bias effect, globalisation does not lead to a smaller impact of distance on trade. Substantial heterogeneity exists when analysing individual commodities.
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