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Over Land and Over Sea: Domestic Trade Frictions in the Philippines

Publication | February 2020
Over Land and Over Sea: Domestic Trade Frictions in the Philippines

This paper estimates domestic trade cost in the Philippines and evaluates how the Roll-On Roll-Off Terminal System (RRTS) affected its evolution using the concept of "border effects."

Domestic trade costs are found to be substantial in the Philippines such that provinces trade 25–53 times more with themselves than with other provinces. The RRTS reduced this "home bias" tendency by a factor of 0.64–0.65. However, this reduction is unevenly distributed. Provinces closest to the capital account for most of the border effect attenuation.

Contents 

  • Introduction
  • The Policy Reform: The Roll-On Roll-Off Terminal Systems
  • Related Literature
  • Methodology
  • Data Sources
  • Results
  • Conclusions and Policy Implications