The border effect in Spain: The Basque Country case

Abstract

Gil-Pareja S., Llorca-Vivero R. and Martínez-Serrano J. A. (2006) The border effect in Spain: the Basque Country case, Regional Studies 40, 335–345. This paper investigates the border effect on the Basque Country's trade, using a sample of 28 Organization for Economic Co-operation and Development (OECD) countries between 1995 and 2001. The results indicate that after controlling for market size and distance, the Basque Country trades between 12 and 16 times more with the rest of Spain than it does with any other country. The Spanish bias is lower in the case of the Basque Country's exports than in the case of imports. With respect to the time evolution, the results show a downward trend. The analysis by trading partners reveals important differences even in the context of European Union countries.

Gil-Pareja S., Llorca-Vivero R. et Martínez-Serrano J. A. (2006) L'effet frontière en Espagne: étude de cas du pays Basque, Regional Studies 40, 335–345. A partir d'un échantillon de 28 pays-membres de l'OCDE, cet article cherche à examiner l'effet frontière sur le commerce du pays Basque entre 1995 et 2001. Compte tenu de la taille du marché et de la distance, les résultats laissent voir que le commerce du pays Basque se fait de 12 à 16 fois plus avec le reste de l'Espagne qu'il ne se fait avec les pays tiers. Le biais espagnol est moins évident pour ce qui est du taux d'exportation du pays Basque par rapport au taux d'importation. Quant aux tendances sous-jacentes, les résultats laissent voir une tendance à la baisse. L'analyse de la ventilation du commerce laisse voir d'importantes différences, même pour ce qui est des pays-membres de l'Ue.

Effet frontière Pays Basque Taux d'exportation Taux d'importation

Gil-Pareja S., Llorca-Vivero R. und Martínez-Serrano J. A. (2006) Der Grenzeffekt in Spanien: der Fall des Baskenlandes, Regional Studies 40, 335–345. Dieser Aufsatz untersucht die Auswirkung der Grenze auf den Handel im Baskenland, wobei er sich auf eine Stichprobe von 28 OECD Ländern im Zeitraum 1995–2001 stützt. Die Ergebnisse zeigen, daß nach Berücksichtigung des Handelsvolumens und der Entfernung das Baskenland zwölf bis zu sechzehn mal soviel Handel mit dem übrigen Spanien treibt wie mit irgend einem anderen Land. Die spanische Ausrichtung auf das Baskenland erweist sich als geringer betreff baskischer Exporte als im Fall von Importen. Hinsichtlich Entwicklung des Handels im Laufe der Zeit weisen die Ergebnisse eine abnehmende Tendenz auf. Im Hinblick auf Handelspartner läßt die Analyse sogar im Zusammenhang mit EU Ländern bedeutende Unterschiede erkennen.

Grenzeffekt Baskenland Ausfuhren Einfuhren

Gil-Pareja S., Llorca-Vivero R. y Martínez-Serrano J. A. (2006) El efecto frontera en España: el caso del País Vasco, Regional Studies 40, 335–345. Este artículo investiga el efecto frontera en el comercio del País Vasco utilizando una muestra de 28 países de la OCDE que comprende el periodo 1995–2001. Los resultados indican que, tras controlar por el tamaño del mercado y la distancia, el País Vasco comercia entre 12 y 16 veces más con el resto de España que con cualquier otro país de la muestra. El sesgo español es menor en el caso de las exportaciones que en el de las importaciones del País Vasco. Con respecto a la evolución temporal, los resultados revelan una tendencia descendente en la magnitud del sesgo doméstico. El análisis por socios comerciales muestra diferencias importantes incluso en el contexto de los países de la Unión Europea.

Efecto fronterizo El País Vasco Exportaciones Importaciones

Keywords:

• Border effect
• Basque Country
• Exports
• Imports

Notes

1. Many studies solve this lack of direct data on a country's interregional trade by assuming that what a country exports to itself is merely the difference between its total output and its total exports to the rest of the world (e.g. Wei, 1996; Head and Mayer, 2000; Nitsch, 2000; Chen, 2004).

2. Despite their use in many early studies of international trade, the gravity model initially lacked theoretical foundations. However, nowadays it is backed up by sound theory. Anderson (1979) derives the gravity equation from a model with product differentiation. Bergstrand (1985, 1989) associates gravity equations with models of monopolistic competition. Helpman and Krugman (1985) justify the gravity model in the framework of a model of trade with increasing returns to scale and product differentiation. Deardoff (1995) and Evenett and Keller (2002) show that gravity equations are consistent with most theoretical models of international trade.

3. These equations usually allow for differences in the intercept, but not in the slope.

4. Authors of previous studies using the gravity equation have often found statistically significant coefficients on dummies for country pairs that share a common border, share membership in an integration agreement, speak a common language, have colonial links, or in which there is at least an island in the pair. The present paper does not add to the gravity equation a dummy variable for colonial links due to the non-existence of colonial links in the sample of countries. In a similar fashion, it does not include a dummy variable for sharing a common language because, apart from Spain, only Mexico shares the Spanish language and, therefore, this variable would capture the peculiarities of trade with that country only.

5. Some gravity models treat the sum of two-way bilateral trade as the dependent variable. However, given that the present paper also considers the possibility that the border effect may differ according to the direction of the Basque Country's trade flows, it treats exports from i to j separately from exports from j to i.

6. The present paper has considered as contiguous to the Basque Country the countries that share a common land border with Spain (France and Portugal). Moreover, the estimations have been performed excluding and including the rest of Spain among the trading partners that share a common border, among the members of the EU EFTA, and among the members of the EMU.

7. As pointed out by Baldwin (1994) and Frankel and Wei (1995), developed countries tend to be more specialized and, thus, they tend to have a larger volume of international trade for a given level of GDP.

8. These 27 countries accounted for 72.3% (84.0%) of the Basque Country's imports (exports) in 2001. Only Turkey from the 28 OECD countries is excluded due to data problems.

9. For the interpretation of dummy variables in semilogarithmic equations, see Halvorsen and Palmquist (1980).

10. As a robustness check, all the equations excluding less-developed countries (the Czech Republic, Korea, Hungary, Mexico, Poland and the Slovak Republic) from the sample of countries have been estimated. The results of these estimations, which are available from authors upon request, are similar to those for the full sample of countries.

11. This is the same procedure used by Helliwell (1998, pp. 27–28) and Anderson and Smith (1999b, pp. 28–29).

12. Henceforth, to economize on space, only the estimation results of equation (2) are presented and discussed.

13. The authors have also checked the robustness of the results to the potential endogeneity problem cited above. To this end, the equations were estimated by three stages least squares (3SLS). For the results, see the Appendix (Table A1).

14. An OLS regression of the estimated coefficients of the dummy variables Spain0 and Spain1 on a constant and a linear trend shows that the estimated coefficients for the linear trend are negative and statistically significant at the 5% level in both cases.

15. The estimated coefficient of the distance variable in the basic specification of the gravity equation (reported in Table 1, column 1) is –0.98.

16. For the factors that could cause the border effect, see Evans (2003).

Additional information

Notes on contributors

Salvador Gil-Pareja

Email: [email protected]

Rafael Llorca-Vivero

Email: [email protected]

José A. Martínez-Serrano

Email: [email protected]