On the Determinants of Trade Between South Korea and Chinese Provinces: Considering Sea-Rail Intermodal Transport Distance

Purpose - The article aims to empirically investigate whether the actual distance based on the sea-rail intermodal route is a factor in determining the amount of trade between neighboring countries by taking South Korea and coastal China, as well as South Korea and inland China, as examples for the period of 2010 to 2019. Design/Methodology - The article employs existing theoretical frameworks to analyze the effect of the actual distance based on the sea-rail intermodal route in determining the trade between South Korea and two respective regions of China. The analysis is conducted with three models, and it uses the gravity model to estimate the results. The variables consist of the GDP, distance, income, and FDI that affects trade. The dummy variable is FTA, and the control variables are the tariffs and exchange rates. Findings - Between South Korea and the entirety of China, actual distance negatively affects trade. Between South Korea and coastal China, actual distance does not affect trade. However, between South Korea and inland China, actual distance negatively affects trade. Except for GDP, FDI and Income variables also differ in the results derived from trade flow, import, exports models. Originality/value - Distance is vital to international trade. The article is the first research study to utilize actual distance data based on the sea-rail route. However, there are differences in the effect of actual distance between South Korea and coastal China and South Korea and inland China, respectively.