HOW MUCH DOES GEOGRAPHY DEFLECT SERVICES TRADE? CANADIAN ANSWERS

We estimate geographic barriers to trade in nine service categories for Canada's provinces from 1997 to 2007 with novel high-quality bilateral provincial trade data. The border directly reduces average provincial trade with the United States relative to interprovincial trade to 2.4% of its bord...

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Bibliographic Details
Published in:	International economic review (Philadelphia) Vol. 55; no. 3; pp. 791 - 818
Main Authors:	Anderson, James E., Milot, Catherine A., Yotov, Yoto V.
Format:	Journal Article
Language:	English
Published:	Philadelphia Blackwell Publishing Ltd 01-08-2014 Wiley Periodicals, Inc
Subjects:	Bilateralism Borders Boundaries Canada Cross border transactions Domestic trade Estimation Foreign trade Geographic location Geography International borders International trade Interprovincial trade Multilateralism Resistance Studies Trade Trade barriers Trade regionalization U.S.A Wholesale trade Canada United States > US
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Summary:	We estimate geographic barriers to trade in nine service categories for Canada's provinces from 1997 to 2007 with novel high-quality bilateral provincial trade data. The border directly reduces average provincial trade with the United States relative to interprovincial trade to 2.4% of its borderless level. Incorporating multilateral resistance reduces foreign trade relative to interprovincial to 0.1% of its frictionless potential. Geography reduces services trade some seven times more than goods trade overall. Surprisingly, intraprovincial (local) trade in services and goods is equally deflected upward, implying that the border increases interprovincial trade much more in services than goods.
Bibliography:	Department of Industry, Canada istex:CBF548949D5577EDD87A0A8FD734E0AFD83C7CFF ArticleID:IERE12071 ark:/67375/WNG-H0BLV7ZJ-G We are grateful to Denis Caron at Statistics Canada for invaluable help with the Canadian services data and to Bernard Hoekman for directions with the U.S. data. We thank Miss Milot's doctoral defense's committee (Yazid Dissou, Hafez Bouarek, RoseAnn Devlin, Marcel Merette, Michel Demers) and Julian Diaz for useful feedback and discussions. We also thank seminar participants at Boston College, Drexel University, the University of Ottawa, the 2011 Southern Economics Association meetings, and the 2012 Kiel‐World Bank Workshop on Services Trade for their comments. We gratefully acknowledge financial support from the Department of Industry, Canada. All errors are our own. ObjectType-Article-2 SourceType-Scholarly Journals-1 ObjectType-Feature-1 content type line 23
ISSN:	0020-6598 1468-2354
DOI:	10.1111/iere.12071