International trade and developing countries: an empirical investigation of the Linder hypothesis

This paper presents empirical evidence in support of the Linder hypothesis for five of the six East African developing countries studied here: Ethiopi a, Kenya, Rwanda, Sudan and Uganda. This finding implies that these countri es trade more intensively with others who have similar per capita income le vels, as predicted by Linder. The contributions of this research are three- fold. First, new information is provided on the Linder hypothesis by focusi ng on developing countries. Second, this is one of very few analyses to cap ture both time-series and cross-section elements of the trade relationship by employing a panel data set. Third, the empirical methodology used in the analysis corrects a major shortcoming in the existing literature by using a censored dependent variable in estimation.