This paper investigates the potential existence of a continental bias in world trade flows.
Using the Helpman, Melitz and Rubinstein two-stage estimation procedure on a sample of 182 countries over the period 1990-2006, we find evidence of an economically significant continental bias. A continent-by-continent analysis reveals that countries located in Asia, Oceania, America and Europe can be considered natural trading partners, whereas this is not the case for Africa. For the latter, results suggest that the relationship between inter and intra-continental trade costs is relatively low, although this fact seems to revert over the last years.
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