ECONOMICS WORKING PAPER SERIES
EXTENDING THE CEPII GRAVITY DATA SET
Tamara Gurevich
Peter Herman
Serge Shikher
Ricky Ubee
Working Paper 2017–01–A
U.S. INTERNATIONAL TRADE COMMISSION
500 E Street SW
Washington, DC 20436
January 2017
Special thanks to Nabil Abbyad and Grace Kenneally for research assistance with this working paper.
Office of Economics working papers are the result of ongoing professional research of USITC Staff and are solely meant to represent the opinions and professional research of individual authors. These papers are not meant to represent in any way the views of the U.S. International Trade Commission or any of its individual Commissioners. Working papers are circulated to promote the active exchange of ideas between USITC Staff and recognized experts outside the USITC and to promote professional development of Office Staff by encouraging outside professional critique of staff research.
Extending the CEPII Gravity Data Set
Tamara Gurevich, Peter Herman, Serge Shikher, and Ricky Ubee
Office of Economics Working Paper 2017–01–A
Abstract
This research note describes in detail the process and data sources used in the CEPII gravity data set update for the years 2007 to 2015. This data update preserves the nomenclature and the structure of the original CEPII data for easier integration into ongoing studies.
1 Introduction
The gravity data set made available by CEPII (
Head et al., 2010) has become a mainstay in trade research. However, the data set has not been updated since 2006. This research note describes the process and data sources used in constructing an update that spans the years 2007–2015. We provide two data files, one containing only the updated variables for the years 2007–2015, and another containing all years of original CEPII and the updated years, spanning the entire period 1948–2015.
This update preserves the nomenclature and structure of the original CEPII data set. The extension is constructed by first creating a balanced panel of bilateral relations between the 224 countries present in the original CEPII database for the years 2007–2015. We then separate CEPII variables into time varying and time invariant, consistent with the original CEPII definitions. For all but a handful of variables described in detail below, we assume the variables are time-invariant and assign the corresponding values from 2006 in the original CEPII data set to all subsequent years. Several variables that are expected to be significantly time-varying (GDP, GDP per capita, population, RTAs, common currency, and GATT/WTO membership) are updated with the appropriate data for each year, subject to data availability. For details on time-varying and time-invariant variables see tables
2 and
3 in the data appendix. The updates to time-varying variables are discussed in greater detail in the following section.
In some cases, such as
comlang_ethno or
conflict, time insensitivity is debatable, since linguistic composition of counties, as well as their conflict status, may change over time. Here, we have elected to use the 2006 values present in the original CEPII database. In most cases, we have done so because the original database has treated them as being time-invariant. In other cases, such as the variable for
conflict, it is unclear what criteria the construction of the original variable followed, making a consistent extension difficult. Additionally, we have chosen not to introduce new countries that have gained independence after 2006 in order to preserve the balanced panel of 224 countries in the original database.
2 Methodology for Updated Variables
2.1 GDP and GDP per capita
We use data from the World Bank's World Development Indicators (WDI) database to update GDP and GDP per capita of both trading partners. The CEPII variables we are updating are
gdp_o,
gdp_d,
gdpcap_o, and
gdpcap_d. The values in these variables are measured in current U.S. dollars, consistent with the original CEPII data.
2.2 Population
Population data come from the WDI database described above. We update the variables
pop_o and
pop_d for each year in the period 2007–2015.
2.3 RTAs and Currency Unions
We update CEPII variables
rta and
comcur using a data set created by
Egger and Larch (
2008) based on the list of trade agreements provided by the WTO. However, the WTO list of trade agreements and common currencies appears to be inconsistent with the CEPII original definitions of
rta and
comcur, as evident from a rather large increase in the number of RTAs and common currency unions between the years 2006 and 2007. For example, the final year of the original CEPII database, 2006, exhibits 2,734 country-pairs in an RTA. The data collected by
Egger and Larch (
2008), used here to extend the CEPII data set, shows 6,470 country-pairs in an RTA in 2006, suggesting a significant disagreement between the two data sources as to what qualifies as an RTA.
In light of this discrepancy, we create two additional variables,
rta_larch and
comcur_larch, which replace the CEPII variable with the WTO/Larch data for all years rather than only 2007–2015. The
rta and
comcur variables take values provided by CEPII for the years 1948–2006 and values provided by the WTO/Larch for the years 2007–2015.
2.4 WTO Membership
We update the variables
gatt_o and
gatt_d for countries that joined the WTO after 2006 using the WTOâs membership timeline. The
gatt variables were updated to take the value of one for all years greater than or equal to the year in which they joined the WTO. For the full list of countries and accession dates see table
1 in the Data Appendix below.
3 Conclusion
This research note provides documentation for our updated CEPII data set that extends the set of gravity variables from 2006 to 2015. We attempt to do so in a way that preserves consistency with the original CEPII data set and readily permits its usage in gravity research, past and present. In particular, we update variables for GDP, GDP per capita, population, and WTO membership. Time-invariant variables are defined so as to be consistent with the original CEPII data.
We are faced with a greater challenge when updating
rta and
comcur variables. CEPII does not provide documentation describing origins of these two variables, and they appear inconsistent with the WTO list of accepted trade agreements and common currency unions. To reconcile this issue, we use the WTO data for years 2007–2015 and provide two additional variables that are WTO-consistent, one for the trade agreements and one for the common currency unions.
We expect that this updated CEPII data will prove helpful to researchers at USITC and to trade researchers and gravity modelers outside the USITC.
Data Appendix
On request, the authors can provide a data archive that consists of several source files, a code to combine the data, and two final data sets.
The data were generated using the R code “Cepii Extender v1.R" that requires the following files as inputs:
“GDPs_From_World_Development_Indicators_CurrentUSdollars.csv"
“gravdata_cepii.dta"
“rta_20160215_stata12.dta"
“WDI_population.dta"
“WTO_Members_post2006.csv"
The GDP and GDP per capita variables
gdp_o,
gdp_d,
gdpcap_o, and
gdpcap_d come from the World Bank's WDI data set. They are all measured in current U.S. dollars and can be found in the file “GDPs_
_CurrentUSdollars.csv"
The population variables
pop_o and
pop_d were updated using figures from the World Bank's WDI. The file “WDI_population.dta" contains these data.
The variables
rta and
comcur were updated using data made available by Mario Larch. Larch's data are in the file “rta_20160215_stata12.dta".
WTO Membership was determined based on the list provided by the WTO. The new entrants were:
Table 1: New Entrants
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Montenegro is not present in the data as it gained independence
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after 2006 and is not included in the original panel of 224 countries.
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Table 2: CEPII Gravity Time-Invariant Variables
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ISO3 code alphanumeric of origin |
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ISO3 alphanumeric of destination |
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ISO2 code alphanumeric of origin |
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ISO2 alphanumeric of destination |
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Area of origin in sq. kms |
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Area of destination in sq. kms |
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Origin is current or former hegemon of destination |
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Destination is current or former hegemon of origin |
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Binary indicator for trade from heg_o to colony |
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Binary indicator for trade from colony to heg_o |
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Contiguity – the two countries share a border |
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The two countries share a common official primary language |
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Common language spoken by at least 9% of the population in both countries |
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Both countries have a common colonizer post 1945 |
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The two countries are in a colonial relationship post 1945 |
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Population-weighted distance between the two countries, in kms |
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Time difference between the two countries, in hrs |
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Binary indicator of war between the two countries |
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Independence date, if former colony |
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The two countries are or have ever been in colonial relationship |
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The two countries are currently in colonial relationship |
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Empire to which both countries belong |
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The two countries have common legal origin |
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Binary indicator for ACP to EU |
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Binary indicator for EU to ACP |
Origin refers to the first country in a country-pair, destination refers to the second.
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Table 3: CEPII Gravity Time-Varying Variables
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GDP of origin, in millions current U.S. dollars |
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GDP of destination, in millions current U.S. dollars |
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GDP per capita of origin, in millions current U.S. dollars |
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GDP per capita of destination, in millions current U.S. dollars |
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Population of origin, total in mn |
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Population of destination, total in mn |
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Binary indicator for origin's membership in GATT/WTO |
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Binary indicator for destination's membership in GATT/WTO |
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Binary indicator for regional trade in force |
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The two countries have common currency |
Origin refers to the first country in a country-pair, destination refers to the second.
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References
Egger and Larch 2008Egger, Peter H and Larch, Mario, "Interdependent Preferential Trade Agreement Memberships: An Empirical Analysis", Journal of International Economics 72, 2 (2008), pp. 384--399.
Head et al. 2010Head, Keith and Mayer, Thierry and Ries, John, "The erosion of colonial trade linkages after independence", Journal of International Economics 81, 1 (2010), pp. 1--14.