Infrastructure quality and trade liberalization
Year: 2023
Type: article
Abstract: It is difficult to establish the impact infrastructure has on trade balances due to confounding factors. Our empirical approach leverages on episodes of trade liberalization, interacting such episodes with infrastructure. Providing a simple extension to the gravity model, we find that infrastructure quality differences between trade partners result in trade imbalances, which liberalization then accentuates. For robustness checks, we interact the liberalization indicator against other confounding variables and do not find such consistent effects. We conclude that lack of quality infrastructure in developing economies contributes to larger trade deficits, and infrastructure development should be supported alongside trade liberalization.
Authors: Jang Ping Thia, Anne Ong Lopez
Language: English
Topic: Global trade and economics
Domain: Social Sciences
Open Access status: hybrid
Estimated APC paid: $3,930
OpenAlex ID: W4366165995