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Border Trade and Regional Integration
Author(s) -
Ge Ying,
He Yin,
Jiang Yeheng,
Yin Xiaopeng
Publication year - 2014
Publication title -
review of development economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.531
H-Index - 50
eISSN - 1467-9361
pISSN - 1363-6669
DOI - 10.1111/rode.12085
Subject(s) - international economics , economics , international trade , economic integration , trade barrier , regional integration , gravity model of trade , regional trade , free trade , liberalization , international free trade agreement , product (mathematics) , quality (philosophy) , economic geography , market economy , geometry , mathematics , philosophy , epistemology
Although it is an important building block of regional integration, very little research has investigated border trade between neighboring countries. This paper fills this gap by examining the patterns and determinants of C hina's border trade with its neighboring countries. First, a disaggregated, firm‐product level trade data is used to provide a detailed overview of border trade growth and dynamics. The paper shows that trade liberalization has significantly encouraged new firms to enter the export market, and new private firms account for the majority of the expansion in border exports and the shift toward more sophisticated products. Second, a gravity model is used to investigate the determinants of border trade. The results suggest that multilateral and regional integration, market size and institutional quality play important roles in promoting border trade.