1Distance, International Trade and Economic Growth
Hossein Panahi, University of Hull, Hull, UK
- Introduction
Researchers have recently become increasingly interested in a set of distance and growth concepts variously described as: neighbourhood effects, borders effect, externalities or
spillovers, access to regional and global market and location and distance. The main goal of this paper is to assess the relationship between Distance, international trade and
economic growth through regressions using data for selected countries over several decades.
2THE ASIAN MIRACLE AND MODERN GROWTH THEORY* Richard P Nelson and Howard Pack The article argues that the rapid growth in a number of Asian economies that occurred between 1960 and 1996 was accompanied by a major change in the structure of their economies including shifts in the size of firms and the sectors of specialisation. These changes were a fundamental component of the growth process. While capital accumulation was an important source of growth, its productive assimilation was a critical component of the success of these economies. Estimates of the contribution of total factor productivity to aggregate growth that neglect these phenomena may lead to erroneous estimates. Over the past thirty-five years Korea, Taiwan, Singapore, and Hong Kong, have
3The Puzzling Persistence of the Distance Effect on Bilateral Trade

Anne-C«elia Disdier† Keith Head‡ July 29, 2006
One of the best established empirical results in international economics is that bilateral trade decreases with distance. Although well-known, this result has not been
systematically analyzed before. We examine 1467 distance effects estimated in 103 papers. Information collected on each estimate allows us to test hypotheses about the
causes of variation in the estimates. Our most interesting finding is that the estimated negative impact of distance on trade rose around the middle of the century and has remained persistently high since then. This result holds even after controlling for many important differences in samples and methods.
4 Does trade raise income evidence from the 20 century
Efforts to estimate the effects of international trade on a country’s real income have been hampered by the failure to account for the endogeneity of trade. Frankel and Romer recently
use a country’s geographic attributes – notably its distance from potential trading partners – to construct an instrument to identify the effects of trade on income in 1985. Using data from
the pre-World War I, the interwar, and the post-war periods, we find that the main result of Frankel and Romer is confirmed throughout the whole century: countries that trade more as a
proportion of their GDP have higher incomes even after controlling for the endogeneity of trade. We also find that the OLS estimate of trade’s effect on income is biased downwards in almost every sample year. However, this result is not robust to the inclusion of distance from equator (latitude).