Trade and Infrastructure Scores
Description
Dataset contains bilateral trade flows (from BACI), infrastructure scores (from WEF) and bilateral tariffs (from TRAINS). Date - 2006 to 2017, in panel format. This is the data for our paper - "Infrastructure Quality and Trade Liberalization". We assembled this dataset from the above sources to allow us to test for the impact of infrastructure quality (i.e., using the infrastructure scores from WEF) on trade. We also use the tariff data (from TRAINS) as modelling variables, with a specific focus on bilateral trade liberalization at 50%, 60% and 70% reductions in bilateral tariffs. Note that this is version 2 of the data, with more updated multilateral resistance terms. Abstract It is difficult to establish the impact infrastructure has on trade balances due to confounding factors. Our empirical approach leverages on episodes of trade liberalization, interacting such episodes with infrastructure. Providing a simple extension to the gravity model, we find that infrastructure quality differences between trade partners result in trade imbalances, which liberalization then accentuates. For robustness checks, we interact the liberalization indicator against other confounding variables and do not find such consistent effects. We conclude that lack of quality infrastructure in developing economies contributes to larger trade deficits, and infrastructure development should be supported alongside trade liberalization. Keywords Infrastructure; Gravity model; Trade; Trade deficits JEL classification O18; F14; F40