1887

International Trade Working Paper

The International Trade Working Paper series promptly documents and disseminates reviews, analytical work and think-pieces to facilitate the exchange of ideas and to stimulate debates and discussions on issues that are of interest to developing countries in general and Commonwealth members in particular. The issues considered in the papers may be evolving in nature, leading to further work and refinement at a later stage.

English

Trade Costs, Market Access and Growth in the Commonwealth

This paper considers how access to international markets affects development and growth, with a particular emphasis on the Commonwealth countries. It shows that countries with low trade costs to large markets have higher levels of gross domestic product (GDP) per capita on average. The relationship is strong and robust, and even extends to areas within the same country. Two implications are explored in detail. First, remote economies such as the Commonwealth’s small island states face a clear disadvantage in achieving sustainable growth. Second, faster growth in economic ‘hubs’ will increase growth in neighbouring countries. By modelling a number of counterfactual scenarios, the paper quantifies the importance of these two results for output and growth.

English

Keywords: growth, Commonwealth, international market access, GDP
JEL: F53: International Economics / International Relations, National Security, and International Political Economy / International Agreements and Observance; International Organizations; F14: International Economics / Trade / Empirical Studies of Trade; F15: International Economics / Trade / Economic Integration
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