Do transport costs have a differential effect on trade at the sectoral level?

Abstract

This paper aims to analyse the determinants of transport costs and to investigate their influence in international trade with a sample of disaggregate trade data. First, we estimate a transport cost function using cross-section data on maritime and overland transport for four sectors: agro-industry, ceramic tiles, motor vehicle parts and accessories, and electrical and mechanical household appliances, obtained from interviews held with Spanish exporters and logistics operators in 2001. Second, we study the relationship between transport costs and trade and estimate the elasticity of trade with respect to transport costs for each sector. Important differences for high and low value-added sectors are observed. The trade equation estimation shows that higher transport costs significantly deter trade, especially in high value-added sectors.