Blockchain effects in Latin America and the Caribbean trade, A Gravity Model approach

Abstract

In international trade, the effect of non-tariff barriers has been widely studied, and several proposed solutions have been given either to reduce these types of barriers and its effects. A revolutionary new technology arises with the potential to propose innovative methods in facilitating trade and reducing or removing significantly trade barriers; this technology is called Blockchain or Distributed Ledger Technology. This research proposes a set of variables based on specific trade facilitation indicators that are directly relevant to the potential of the Blockchain technology and performs an econometrical analysis founded on the Gravity Model to study the explanatory significance and potential effects of these variables in the case of Latin America and the Caribbean with the rest of the world. The results suggest a significant relationship between most of the proposed trade facilitation variables with trade volumes in bilateral trade; indicating, therefore, the potential Blockchain technology could have in boosting international trade.