Understanding Globalization Through the Lens of Gravity

Since 1962, economists have used the "gravity equation" in international trade to explain empirically bilateral international trade flows, and have since more recently adopted the gravity model to explain foreign direct investment stocks. Motivated by its empirical success, Jeffrey H. Bergstrand provided one of the earliest formal theoretical foundations for the gravity equation in international trade in 1985. Since then, the gravity equation has become a fundamental element of international trade theory, empirical work, and policy analysis, especially of the effects of economic integration agreements and tariffs on trade flows and welfare. Understanding Globalization Through the Lens of Gravity is a curated collection of Bergstrand's published papers over the 30 years since his first paper on the theme of gravity. In four parts, the 17 papers span topics such as the determinants of international trade flows, economic determinants of free trade agreements, estimating the effects of economic integration agreements on trade flows, and economic determinants of multinational firms' foreign direct investment stocks, foreign affiliate sales and governments' bilateral investment treaties.

• About the Author
• Acknowledgments
• Introduction
• Determinants of International Trade Flows:
  • The Gravity Equation in International Trade: Some Microeconomic Foundations and Empirical Evidence
  • The Generalized Gravity Equation, Monopolistic Competition, and the Factor-Proportions Theory in International Trade
  • The Heckscher-Ohlin-Samuelson Model, the Linder Hypothesis, and the Determinants of Bilateral Intra-Industry Trade
  • The Growth of World Trade: Tariffs, Transport Costs, and Income Similarity
  • Bonus Vetus OLS: A Simple Method for Approximating International Trade-Cost Effects using the Gravity Equation
  • Gravity Redux: Estimation of Gravity-Equation Coefficients, Elasticities of Substitution, and General Equilibrium Comparative Statics under Asymmetric Bilateral Trade Costs
• Determinants of Economic Integration Agreements:
  • Economic Determinants of Free Trade Agreements
  • Economic Determinants of Free Trade Agreements Revisited: Distinguishing Sources of Interdependence
  • Economic Determinants of the Timing of Preferential Trade Agreement Formations and Enlargements
• Estimating the Effects of Economic Integration Agreements:
  • Do Free Trade Agreements Actually Increase Members' International Trade?
  • Estimating the Effects of Free Trade Agreements on International Trade Flows using Matching Econometrics
  • Economic Integration Agreements and the Margins of International Trade
  • Economic Integration Agreements, Border Effects, and Distance Elasticities in the Gravity Equation
• Foreign Direct Investment, Foreign Affiliate Sales, and Multinational Enterprises:
  • A Knowledge-and-Physical-Capital Model of International Trade Flows, Foreign Direct Investment, and Multinational Enterprises
  • Shouldn't Physical Capital Also Matter for Multinational Enterprise Activity?
  • What Determines BITs?