Is Our World Going to Get a Whole Lot Smaller?

Byron S. Ganges (), Alyson C. Ma () and Ari Van Assche ()
Additional contact information
Byron S. Ganges: University of Hawaii at Manoa; Visiting Professor, Yokohama National University
Alyson C. Ma: University of San Diego
Ari Van Assche: HEC Montreal, Katholieke Universiteit Leuven and CIRANO

No 2011-1, Working Papers from University of Hawaii Economic Research Organization, University of Hawaii at Manoa

Abstract: The surge of oil prices in recent years has led to speculation that rising transportation costs could end the period of dramatic world trade growth �in the words of Rubin (2009), ��Your world is going to get a whole lot smaller.� Using data from China�s Customs Statistics, we examine the impact of oil prices on trade�s sensitivity to distance. We find that higher oil prices increase trade�s elasticity to distance, but that the economic effect is small. We also find that the effect is more pronounced for trade within global production networks, and less large for goods shipped by air.

Keywords: oil prices; distance; trade; vertical specialization; mode of transport; China. (search for similar items in EconPapers)
JEL-codes: F14 F15 F23 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2011-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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