18 18 _Table 1. Bilateral imports and indicators of protectionism in government procurement, gravity estimations_

||(1)|(2)|(3)|(4)|(5)|(6)|
|---|---|---|---|---|---|---|
|Dep. variable: bilateral imports|Discrim|ination|Pref. tr|eatment|Dom. s|ourcing|
|Internal trade|2.463***<br>(0.364)||1.736***<br>(0.497)||2.542***<br>(0.363)||
|Internal trade x protectionism indicator|0.275|0.257|1.050**|1.068**|0.155|0.177|
||(0.323)|(0.323)|(0.423)|(0.416)|(0.182)|(0.179)|
|Internal trade x WTO w/out GPA|0.943***|0.802***|0.749***|0.593**|0.835***|0.686***|
||(0.258)|(0.270)|(0.232)|(0.247)|(0.239)|(0.254)|
|Internal trade x GPA|1.132***|1.077**|1.024**|0.954**|1.181***|1.116***|
||(0.419)|(0.422)|(0.402)|(0.403)|(0.400)|(0.406)|
|Internal trade x EU|0.258|0.231|0.134|0.114|0.133|0.118|
||(0.310)|(0.305)|(0.217)|(0.224)|(0.234)|(0.236)|
|Internal trade x Ln(GDP)|-0.244***|-0.252***|-0.250***|-0.261***|-0.232***|-0.243***|
||(0.084)|(0.086)|(0.078)|(0.079)|(0.082)|(0.084)|
|Internal trade x Ln(GDP cap)|-0.093|-0.221|-0.124|-0.263*|-0.147|-0.281*|
||(0.141)|(0.155)|(0.145)|(0.154)|(0.146)|(0.157)|
|Internal trade x Institutions WGI|-0.014**|-0.008|-0.012|-0.006|-0.012|-0.006|
||(0.007)|(0.009)|(0.007)|(0.009)|(0.008)|(0.009)|
|Obs|490371|490371|486594|486594|490371|490371|

_Notes: The dependent variable is the value of bilateral imports. Annual data from 2000 to 2018. All columns include importer-year and exporter-year fixed effects. Column (2) include country-pair (directed) fixed effects. Columns (5) and (6) include interactions between the internal trade dummy and year dummies. Standard errors three-way clustered by undirected country-pair, importer and exporter in parenthesis. * stands for statistical significance at the 10% level, ** at the 5% level and *** at the 1% percent level._ In Figure 4, we display the coefficient on the interaction between the internal trade dummy and the protectionism indicator obtained by estimating our baseline gravity regression by aggregate sector. The specification includes all the bilateral as well as the importer-specific controls (column (4) in Table 2 and odd-numbered columns in Table 3). We confirm the finding from 3: the border effect is significantly higher for countries whose law on government procurement has a preferential treatment provision, and this holds in the primary, manufacturing and service sectors. This effect is strong and consistent in the manufacturing sector, whereas it is less precisely estimated in the other two sectors. In services, the estimates suggest that importers without a national treatment clause, with preferential treatment and a domestic sourcing provision (what we classified as “protectionist”) have a lower border effect. This counterintuitive result is however reversed for importers with preferential treatment provisions, and is not significant for importers that impose domestic sourcing.

The results by industry summarized in Table A-6 in the Appendix are less conclusive than the results by sector, because of the incompleteness of the data at this level of disaggregation.<sup>8</sup> They nonetheless confirm that the border effect is greater for importers with preferential treatment provisions in government procurement, and more precisely estimated for manufacturing industries.

> 8 The PPML estimates converged for 152 industries out of the 177 in the ITPD-E database.

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