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Publication
The effect of International Logistics, Free Trade Agreements and Distance on International Trade, the case of Panama
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Abstract(s)
This study aims to determine the effect of International Logistics, Free Trade Agreements and Distance on International Trade in Panama. In terms of Distance I decided to include three dimensions, Geographical, Cultural and Institutional Distance in order to define the effect of each dimension on International Trade. Moreover, Panama was chosen since the importance of Latin American countries on International Trade has been recognized. However, countries from this region tends to present totally different behaviours. Further, this country has proved to be an open economy promoting International Trade. Nevertheless, within the literature still remains a lack of studies addressing Latin American countries. Thus, this study aims to help filling that void in the literature. Additionally, I focused on one specific country to obtain more precise results related to the country. Gravity model is the framework I used to develop the hypotheses, since it has been well-recognized, acknowledged and widely used in the literature. The hypotheses were tested using a sample covering Panama and 85 trade partners in specific years from 2007 to 2018. Data were taken from official secondary sources resulting in 510 observations and were analysed using Ordinary Least Squares (OLS) linear regression. The results of this study confirm the positive effect that International Logistics and FTAs have on International Trade, also the negative effect of Geographical Distance was confirmed. However, no effect was found for Cultural Distance and regarding Institutional Distance a positive effect was found, contrary to the literature. Thus, this study contributes to the literature by empirically testing that for Panama as Latin American country, the improvement of Logistics and liberalization of trade due to FTAs have a positive impact. Moreover, the different behaviours on International Trade were also corroborated since Panama tend to trade most with far countries and highly different in terms of Institutions, stressing the importance of study individually countries from this region and also Distance dimensions.
Description
Keywords
International Trade International Logistics Free Trade Agreements Distance Latin America Panama