Anna Maria Pinna (p), Vania Manuela Licio

Leopold Ringwald

When investigating on territorial connectivity and market access issues, the main element that provides information on the territory and the accessibility conditions it imposed is the simple geographic distance with its geodesic or linear measure. Also, a simple geographical measure is used when implementing the gravity model for assessing the amount of trade between countries. However, great circle distances, although simple to obtain and intuitive to interpret, present the drawback of being crude, as in Ozak (2010). Geographic distance, as the distance between two points on the earth's surface, is quite simplistic as it fails to account for the significant variations in geographical and technological factors that influence similar great circle distances across different types of geographies and periods.

In this paper, we develop and apply new procedures for providing evidence on how the same geographic distance varies in different territories. We use novel data on travel times between Italian NUTS4 units and territorial typologies (local administrative units at level 2). Measuring how much time is needed to move from one unit to another allows us to capture better technological advances or favourable geographic conditions that can reduce a fixed geodesic measure. The first implication is that internal measures commonly used in the literature are biased, in the best case, if not incorrect.
In this work, we provide novel evidence by using data on the Italian road network and travel times needed to connect distinct types of territorial units. We also consider traffic congestion, an element not considered when measuring travel times.

Inacio Araujo, Eduardo Haddad (p)

Anna Maria Pinna

This study explores changes in regional inequality and examines distinct adjustment patterns among Brazilian states investigating the role played by interregional trade during economic stagnation. We combine structural decomposition analysis with observed demographic changes to identify the main drivers of change in regional inequality. By focusing on different dimensions of integration, we show that changes in intra-regional and international integration were the main drivers of the observed reduction in regional inequality. However, inter-regional trade was critical to drive changes in regional value-added, acting as an absorber of structural changes for the richer states.

Ting-Wei Lai, Shin-kun Peng (p), Raymond Riezman, Ping Wang

Eduardo Haddad

In this paper, we assess productivity changes at the country level and investigate the factors contributing to a significant proportion of these changes. Using data covering OECD countries, we then categorize them into three groups. We find that in high- and low-income countries, productivity changes are primarily driven by country-specific technology, while in middle-income countries, capital is the most significant factor, contributing up to 43.0% of the changes. We then examine whether the productivity changes are strong enough to account for structural transformation, which manifests as the evolution of the dominance of output share in a specific industry. We find that in industries where high-, middle-,or low-income countries can maintain their dominance in output share, comparative advantages in productivity changes are driven by all factors (mainly country-specific technology and capital) excluding tariffs. The comparative edges in the changes in capital and unskilled labor shares serve as complementary explanations for the continuity of dominance. For most industries where one group of countries overtakes another, the primary cause is the changes in the shares of capital and skilled labor, rather than factor-induced productivity changes.

Leopold Ringwald (p), Tamas Krisztin, David Leclere

Shin-kun Peng

International trade in agricultural and forestry commodities has been extensively documented as a cause of decline in natural vegetation and subsequently biodiversity, particularly in tropical and subtropical regions of the world. Naturally, a considerable portion of trade in these commodities is directed to high-income economies and – contrary to stated sustainable development objectives – exacerbates their impact on biodiversity. For instance, part of the EU Deforestation Regulation (EUDR), which entered into force mid-2023, constitutes a concrete trade policy intervention to mitigate the global biodiversity footprint of the European Union by constraining imports of notorious products in this sector to not originate from recently deforested land or having contributed to forest degradation.
In this context, the present study aims on empirically investigating international trade in agricultural and forestry products well evidenced as major drivers of biodiversity loss in their regions of origin, e.g. cattle, wood, cocoa, soy, palm oil, coffee, rubber. More specifically, we model bilateral trade flows of our selected products as arising from a structural gravity specification, while simultaneously adjusting for spatial dependence. The model will be estimated via a hierarchical Bayesian framework, which allows for uncertainty over its spatial structure as well as modelling of excess zero observations via zero-inflation. The data entering our model covers yearly observations from 1995-2019 of bilateral trade flows at the product level from the BACI database, importer & exporter macroeconomic indicators at the product level from FAOSTAT, and classical distance & trade cost related variables as sourced from CEPII and UNCTAD TRAINS.
Accordingly, our zero-inflated Poisson (ZIP) structural gravity model is able to estimate conditions of trade genesis as well as trade cost & expansion elasticities specific to our products of interest. Furthermore, through its structural form our gravity model object captures importer \& exporter specific multilateral resistance and thereby allows us to analyze unilateral trade policies, such as the EUDR, and their effects on warping global trade patterns, which carries the potential of blurring the intended mitigation of the EUDR on deforestation and biodiversity loss on a global scale.