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Table 3.

Two-Stage Least Squares Estimates

	Exports		Imports
Explanatory Variables	(1)	(2)	(3)	(4)
A. Second stage; dependent variable: $l n (Expor t_{ij, t + 1})$ and $l n (Impor t_{ij, t + 1})$
$l n (A C F I C_{i t} C B T_{j t})$	0.336^***	0.378^***	0.381^***	0.288^***
(0.034)	(0.032)	(0.068)	(0.066)
$l n (G D P_{i t})$	0.827^***	1.721^***	1.581^***	2.389^***
(0.072)	(0.066)	(0.129)	(0.125)
$l n (G D P_{j t})$	0.372^***	0.399^***	0.672^***	0.837^***
(0.050)	(0.048)	(0.103)	(0.104)
$l n (D i s t a n c e_{i j})$	−0.236^***	−0.271^***	−0.543^***	−0.740^***
(0.063)	(0.060)	(0.115)	(0.115)
$B o r d e r_{i j}$	3.513^***	3.335^***	3.288^***	3.287^***
(0.597)	(0.586)	(0.829)	(0.834)
$R e l i g i o n_{i j}$	1.991^***	2.838^***	1.582^***	1.463^***
(0.233)	(0.256)	(0.541)	(0.467)
$l n (P o p u l a t i o n_{i t})$	0.576^***	−0.508^***	−0.379^**	−1.333^***
(0.091)	(0.084)	(0.175)	(0.154)
$l n (P o p u l a t i o n_{j t})$	0.267^***	0.226^***	−0.273^***	−0.320^***
(0.048)	(0.049)	(0.098)	(0.100)
$l n (A r e a_{i t})$	−0.645^***	−0.507^***	−0.953^***	−0.732^***
(0.033)	(0.025)	(0.062)	(0.046)
$l n (A r e a_{j t})$	−0.087^***	−0.086^***	0.187^***	0.170^***
(0.022)	(0.021)	(0.038)	(0.037)
$S F I_{j t}$	−0.033^***	−0.026^**	−0.059^**	−0.070^***
(0.012)	(0.012)	(0.024)	(0.024)
$l n (T C P_{j, t - 1})$	0.117^***	0.113^***	0.093^***	0.108^***
(0.021)	(0.020)	(0.035)	(0.035)
B. First stage; dependent variable: $l n (ACFI C_{it} CB T_{jt})$
$l n (P r i v a t e F i r m_{i t} C B T_{j t})$	1.001^***	1.015^***	0.988^***	0.975^***
(0.009)	(0.009)	(0.010)	(0.010)
$l n (G D P_{i t})$	−0.896^***	−0.976^***	−0.898^***	−1.031^***
(0.018)	(0.020)	(0.019)	(0.024)
$l n (G D P_{j t})$	0.030^***	0.008	0.034^**	0.072^***
(0.011)	(0.011)	(0.013)	(0.014)
$l n (D i s t a n c e_{i j})$	−0.025	0.074^***	−0.029	−0.145^***
(0.016)	(0.016)	(0.019)	(0.019)
$B o r d e r_{i j}$	−0.067	−0.029	−0.093	−0.237^*
(0.100)	(0.097)	(0.103)	(0.131)
$R e l i g i o n_{i j}$	−0.115^***	−0.173^***	−0.003	−0.074
(0.043)	(0.038)	(0.087)	(0.083)
$l n (P o p u l a t i o n_{i t})$	0.518^***	0.592^***	0.603^***	0.746^***
(0.027)	(0.024)	(0.031)	(0.028)
$l n (P o p u l a t i o n_{j t})$	−0.002	0.021^*	−0.006	−0.040^***
(0.012)	(0.013)	(0.015)	(0.015)
$l n (A r e a_{i t})$	0.162^***	0.135^***	0.138^***	0.097^***
(0.010)	(0.008)	(0.013)	(0.010)
$l n (A r e a_{j t})$	0.000	0.007	0.001	−0.002
(0.006)	(0.006)	(0.007)	(0.007)
$S F I_{j t}$	−0.001	−0.008^***	−0.002	0.001
(0.003)	(0.003)	(0.003)	(0.003)
$l n (T C P_{j, t - 1})$	0.008^*	0.004	0.013^**	0.030^***
(0.005)	(0.005)	(0.005)	(0.006)
Fixed effects	No	Province Country Year	No	Province Country Year
No. of observations	6,203	6,203	4,870	4,870
Cragg–Donald statistic	25,938	23,083	19,117	14,459
(Critical value)	(16.38)	(16.38)	(16.38)	(16.38)
First-stage R-squared	0.957	0.947	0.950	0.932
Second-stage R-squared	0.702	0.786	0.549	0.640

	Exports		Imports
Explanatory Variables	(1)	(2)	(3)	(4)
A. Second stage; dependent variable: $l n (Expor t_{ij, t + 1})$ and $l n (Impor t_{ij, t + 1})$
$l n (A C F I C_{i t} C B T_{j t})$	0.336^***	0.378^***	0.381^***	0.288^***
(0.034)	(0.032)	(0.068)	(0.066)
$l n (G D P_{i t})$	0.827^***	1.721^***	1.581^***	2.389^***
(0.072)	(0.066)	(0.129)	(0.125)
$l n (G D P_{j t})$	0.372^***	0.399^***	0.672^***	0.837^***
(0.050)	(0.048)	(0.103)	(0.104)
$l n (D i s t a n c e_{i j})$	−0.236^***	−0.271^***	−0.543^***	−0.740^***
(0.063)	(0.060)	(0.115)	(0.115)
$B o r d e r_{i j}$	3.513^***	3.335^***	3.288^***	3.287^***
(0.597)	(0.586)	(0.829)	(0.834)
$R e l i g i o n_{i j}$	1.991^***	2.838^***	1.582^***	1.463^***
(0.233)	(0.256)	(0.541)	(0.467)
$l n (P o p u l a t i o n_{i t})$	0.576^***	−0.508^***	−0.379^**	−1.333^***
(0.091)	(0.084)	(0.175)	(0.154)
$l n (P o p u l a t i o n_{j t})$	0.267^***	0.226^***	−0.273^***	−0.320^***
(0.048)	(0.049)	(0.098)	(0.100)
$l n (A r e a_{i t})$	−0.645^***	−0.507^***	−0.953^***	−0.732^***
(0.033)	(0.025)	(0.062)	(0.046)
$l n (A r e a_{j t})$	−0.087^***	−0.086^***	0.187^***	0.170^***
(0.022)	(0.021)	(0.038)	(0.037)
$S F I_{j t}$	−0.033^***	−0.026^**	−0.059^**	−0.070^***
(0.012)	(0.012)	(0.024)	(0.024)
$l n (T C P_{j, t - 1})$	0.117^***	0.113^***	0.093^***	0.108^***
(0.021)	(0.020)	(0.035)	(0.035)
B. First stage; dependent variable: $l n (ACFI C_{it} CB T_{jt})$
$l n (P r i v a t e F i r m_{i t} C B T_{j t})$	1.001^***	1.015^***	0.988^***	0.975^***
(0.009)	(0.009)	(0.010)	(0.010)
$l n (G D P_{i t})$	−0.896^***	−0.976^***	−0.898^***	−1.031^***
(0.018)	(0.020)	(0.019)	(0.024)
$l n (G D P_{j t})$	0.030^***	0.008	0.034^**	0.072^***
(0.011)	(0.011)	(0.013)	(0.014)
$l n (D i s t a n c e_{i j})$	−0.025	0.074^***	−0.029	−0.145^***
(0.016)	(0.016)	(0.019)	(0.019)
$B o r d e r_{i j}$	−0.067	−0.029	−0.093	−0.237^*
(0.100)	(0.097)	(0.103)	(0.131)
$R e l i g i o n_{i j}$	−0.115^***	−0.173^***	−0.003	−0.074
(0.043)	(0.038)	(0.087)	(0.083)
$l n (P o p u l a t i o n_{i t})$	0.518^***	0.592^***	0.603^***	0.746^***
(0.027)	(0.024)	(0.031)	(0.028)
$l n (P o p u l a t i o n_{j t})$	−0.002	0.021^*	−0.006	−0.040^***
(0.012)	(0.013)	(0.015)	(0.015)
$l n (A r e a_{i t})$	0.162^***	0.135^***	0.138^***	0.097^***
(0.010)	(0.008)	(0.013)	(0.010)
$l n (A r e a_{j t})$	0.000	0.007	0.001	−0.002
(0.006)	(0.006)	(0.007)	(0.007)
$S F I_{j t}$	−0.001	−0.008^***	−0.002	0.001
(0.003)	(0.003)	(0.003)	(0.003)
$l n (T C P_{j, t - 1})$	0.008^*	0.004	0.013^**	0.030^***
(0.005)	(0.005)	(0.005)	(0.006)
Fixed effects	No	Province Country Year	No	Province Country Year
No. of observations	6,203	6,203	4,870	4,870
Cragg–Donald statistic	25,938	23,083	19,117	14,459
(Critical value)	(16.38)	(16.38)	(16.38)	(16.38)
First-stage R-squared	0.957	0.947	0.950	0.932
Second-stage R-squared	0.702	0.786	0.549	0.640

Notes: Standard errors clustered at the level of province–country pair are included in parentheses. Significance level = ^*p < 0.1, ^**p < 0.05, ^***p < 0.01. The critical value of the Cragg–Donald statistic in each parentheses corresponds to the 10% maximal IV size.

Source: Authors’ calculations.

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