A Gravity Model of Colombian Foreign Trade, 1991-2012

Abstract

Colombian foreign trade is determined by the possibilities of access to external markets. Such access depends on the distance between the country and its trading partners — not only geographic distance, but also distance from the political and administrative, cultural and economic perspectives. These dimensions of “distance” are analyzed here using a gravity model of foreign trade. For this purpose, we use trade flow data between Colombia and 173 countries. We find that Colombia is very sensitive to geographical distances in selecting trade partners, and even more sensitive to sharing a common language with its partners. In addition, geographic variables, such as access to the sea, and administrative variables, such as having regional agreements or belonging to the World Trade Organization, become critical for establishing commercial relations with the rest of the world.