Where _zijk_ is 1, if a trade flow in product _k_ between countries _i_ and _j_ is observed, and 0 otherwise. We run the two-step Heckman model for the 15 sectors described above, with some minor changes.<sup>32</sup>

**Table 10:** **_Heckman Estimation for Quality Trade_**

|Chapters|01|-05|06|-15|16|-23|25|-27|
|---|---|---|---|---|---|---|---|---|
||(1)Flow|(2)Select|(3)Flow|(4)Select|(5)Flow|(6)Select|(7)Flow|(8)Select|
|Wei. Dist.|0.117***<br>(0.018)|-1.148***<br>(0.077)|0.133***<br>(0.023)|-0.947***<br>(0.074)|0.168***<br>(0.020)|-1.070***<br>(0.086)|0.443***<br>(0.039)|-1.282***<br>(0.066)|
|GDP Ratio|0.119***<br>(0.009)|-0.285***<br>(0.046)|0.185***<br>(0.011)|-0.264***<br>(0.038)|0.144***<br>(0.010)|-0.230***<br>(0.049)|0.086***<br>(0.019)|0.638***<br>(0.021)|
|Obs.|168630|168630|140490|140490|169470|169470|51660|51660|
|Chapters|28|-38|39|-40|41|-43|44|-49|
||(9)Flow|(10)Select|(11)Flow|(12)Select|(13)Flow|(14)Select|(15)Flow|(16)Select|
|Wei. Dist.|0.205***<br>(0.026)|-0.698***<br>(0.049)|0.191***<br>(0.016)|-0.814***<br>(0.052)|0.090**<br>(0.040)|-0.616***<br>(0.044)|0.215***<br>(0.023)|-0.928***<br>(0.050)|
|GDP Ratio|0.129***<br>(0.012)|-0.330***<br>(0.021)|0.120***<br>(0.009)|0.534***<br>(0.012)|0.120***<br>(0.027)|0.410***<br>(0.017)|0.213***<br>(0.012)|0.507***<br>(0.019)|
|Obs.|267120|267120|77280|77280|32340|32340|86940|86940|
|Chapters|50|-63|64|-67|68|-71|72|-83|
||(17)Flow|(18)Select|(19)Flow|(20)Select|(21)Flow|(22)Select|(23)Flow|(24)Select|
|Wei. Dist.|0.115***<br>(0.025)|-0.749***<br>(0.053)|0.092*<br>(0.048)|-0.760***<br>(0.085)|0.289***<br>(0.027)|-1.200***<br>(0.074)|0.196***<br>(0.020)|-1.194***<br>(0.071)|
|GDP Ratio|0.176***|-0.355***|-0.122***|0.463***|0.156***|-0.326***|0.111***|0.691***|
||(0.016)|(0.022)|(0.042)|(0.031)|(0.011)|(0.032)|(0.010)|(0.023)|
|Obs.|258510|258510|23310|23310|66780|66780|214410|214410|
|Chapters|8|4|8|5|86, 8|8, 89|90|-97|
||(25)Flow|(26)Select|(27)Flow|(28)Select|(29)Flow|(30)Select|(31)Flow|(32)Select|
|Wei. Dist.|0.143***|-0.726***|0.234***|-0.985***|0.038|-0.752***|0.182***|-1.055***|
||(0.017)|(0.048)|(0.026)|(0.078)|(0.051)|(0.061)|(0.025)|(0.077)|
|GDP Ratio|0.102***|0.538***|0.078***|0.705***|0.070**|0.509***|0.120***|0.825***|
||(0.005)|(0.012)|(0.009)|(0.023)|(0.032)|(0.026)|(0.011)|(0.029)|
|Obs.|186270|186270|137130|137130|23310|23310|137970|137970|

Notes: All regressions are run with importing and exporting country fixed effects as well as product fixed effects, for which the coefficients are not reported; Wei. Dist. and GDP Ratio stand for the log of weighted distance and the ratio (in logs) of GDP between the importing and exporting country, respectively; ***,**,* denotes significance at the 1 %, 5 %, and 10 % level, respectively; robust standard errors, which are in parentheses, are corrected for clustering by country pair.

The Heckman estimation results which are reported in Table 10 confirm the earlier regressions results. For all selection equations (all even column numbers) the distance coefficient is strongly negative, corroborating the conjecture that trade relations are less likely 32 We had to drop the chapter 24 as well as 87 in order to be able to find solutions. Furthermore, we run separate estimations for the chapters 84 (nuclear reactors, boilers, machinery & mech. appliances; parts) and 85 (electrical machinery, equipment, and parts as well as telecomm. equipment, sound recorders, and television recorders).

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