Do Islands Trade More or Less? A Meta-analysis of Findings From Gravity Models

We collected 95 primary studies that deploy the gravity model and use a dummy for islands as a controlling variable. Our analysis rejects the presence of (publication) bias in the empirical literature. The primary studies reveal a statistically positive and economically meaningful meta effect. The genuine effect of insularity on trade is significantly positive, also after accounting for the effects of differences in study designs that provide a strong argument for replications of earlier studies with more advanced econometric methods as well as more focussed and dedicated studies on the trade impact of being an island. Based on the meta-analysis the ‘best practice’ genuine effect conditional on the identified heterogeneity is 0.477 (significant at the 1% level). This finding implies that being an island is on average associated with sixty percent larger trade