Trade, complexity and distance: an empirical investigation

Mardi | 2016-05-10
16h-17h20 Sully05

Sandrine NOBLET

The aim of this paper is to link the complexity of production process and the geographical dimension of fragmentation. More specially, we address the following questions: 1) how does complexity affect import volumes? and 2) how does complexity act the sensitivity of trade flows to the distance? To do so, we construct an indicator of complexity from US input-output tables. This indicator is then introduced in a gravity equation (using Comtrade Data) as a regressor and as an interaction term with the distance. Our results show that: imports are reduced by complexity and that more complex production processes are related to higher distance coefficient (in absolute value).