This paper analyses, whether the number of neighbouring countries (NrNC) as well as the ratio of neighbouring countries already members of the WTO (RaNC) have an effect on the bilateral trade volume between OECD- and Non-OECD-countries. For this analysis the use of a fixed-effect-vector-decomposition estimator was applied, to face the problems which occur by having panel-data-set and time-invariant variables. The results are clear. The effect of RaNC is positive for countries already members of the WTO. It is negative for countries which still stay out of the WTO. In all cases the effects are significant.This paper was presented at the 18th International Conference of the International Trade and Finance Association, meeting at Universidade Nova de Lisboa, Lisbon, Portugal, on May 23, 2008.
