Shipping connectivity and bilateral trade in low and middle income regions: evidence from Latin America and the Caribbean
摘要
While the literature has documented the effects of shipping connectivity on international trade flows, evidence for low and middle income regions remains limited. This paper examines the relationship between container shipping connectivity and bilateral trade between Latin America and the Caribbean and other regions (Europe, North America, East Asia, South Asia, West Asia, Africa, and Oceania) from 2006 to 2022. Using a higher-order fixed effects gravity model of trade, the study disentangles the impact of shipping connectivity on export trade value. The findings indicate an average trade elasticity of 0.34%, twice the global average, with significant variation across the South American, Central American, and Caribbean subregions. Furthermore, when disaggregating the general effect, the strongest impact is observed in trade flows with Asian countries, particularly on the textile and agricultural sectors. Based on these insights, the paper proposes a set of policy recommendations aimed at enhancing port connectivity in low and middle income regions.