International transport costs and the margins of Intra-Latin American maritime trade

Abstract

This paper focuses on the analysis of the relationship between maritime trade and transport cost in Latin America. The analysis is based on disaggregated (SITC 5 digit level) trade data for intra Latin maritime trade routes over the period 1999-2004. The research contributes to the literature by disentangling the effects of transport costs on the range of traded goods (extensive margin) and the traded volumes of goods (intensive margin) of international trade in order to test some of the predictions of the trade theories that introduce firm heterogeneity in productivity, as well as fixed costs of exporting. Recent investigations show that spatial frictions (distance) reduce trade mainly by trimming the number of shipments and that most firms ship only to geographically proximate customers, instead of shipping to many destinations in quantities that decrease in distance. Our analyses confirm these findings and show that the opposite pattern is observed for ad-valorem freight rates that reduce aggregate trade values mainly by reducing the volume of imported goods (intensive margin).

Citation

Martínez-Zarzoso, I., & Wilmsmeier, G. (2010). International transport costs and the margins of Intra-Latin American maritime trade. Aussenwirtschaft, 65, 49-72

• Journal Article Type: Article
• Publication Date: 2010
• Deposit Date: Mar 18, 2011
• Peer Reviewed: Peer Reviewed
• Volume: 65
• Pages: 49-72
• Keywords: Maritime trade; transport costs; Latin America; trade routes; imported goods
• Public URL: http://researchrepository.napier.ac.uk/id/eprint/4207