There is large variation in trade patterns across the world. Despite the popular discussion on the ‘death of distance’, distance is still the most important variable explaining this variation. In explaining trade patterns across the worls, it is important to acknowledge the multiple...

There is large variation in trade patterns across the world. Despite the popular discussion on the ‘death of distance’, distance is still the most important variable explaining this variation. In explaining trade patterns across the worls, it is important to acknowledge the multiple...

Economists increasingly pay attention to social capital as an important determinant of macroeconomic growth performance. At the same time, there is discussion regarding the robustness of the results of empirical growth studies. In a seminal paper, Knack and Keefer (1997) assess the effect of...

To serve foreign markets, firms can either export or set up a local subsidiary through horizontal Foreign Direct Investment (FDI). The conventional proximity-concentration theory suggests that FDI substitutes for trade if distance between countries is large, while exports become more important...

The gravity model is the workhorse model to describe and explain variation in bilateral trade patterns. Consistent with both Heckscher-Ohlin models and models of imperfect competition and trade, this versatile model has proven to be very successful, explaining a large part of the variance in...

This paper studies the effect of institutions on trade flows, using a gravity model approach. Standard gravity equations incorporate factors such as geographical proximity, language, trade policy and common history as explanatory factors for variation in bilateral trade that reflect the costs of...

This paper studies the effect of institutions on trade flows, using a gravity model approach. We start from a standard gravity equation that incorporates geographical proximity, language, trade policy and common history. These factors reflect the costs of trade across geographical and cultural...