Does Distance Matter for Trade in Services? The Case of Interprovincial Trade in Canada

Catherine Boulatoff (), Talan B. İşcan () and Yulia Kotlyarova
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Catherine Boulatoff: Dalhousie University
Talan B. İşcan: Dalhousie University

Open Economies Review, 2022, vol. 33, issue 1, No 8, 157-185

Abstract: Abstract We examine the impact of geographic distance, economic size, and jurisdictional borders on Canadian interprovincial trade in services at the industry level. Using a gravity model, we find that the average elasticity of service trade with respect to distance is − 1.1, which coincides with the median estimate of average elasticity of merchandise trade with respect to distance. However, the point estimates of the elasticity of distance are significantly higher in magnitude in Arts and Health, while distance matters much less for Telecommunications and Information Technology. We also find that the elasticity of trade with respect to exporter and importer gross domestic product is highly industry specific. Our findings suggest that distance is still a key determinant of service trade and the income elasticity of demand is heterogeneous within the service sector.

Keywords: Trade in services; Interregional trade; Distance effect; Gravity model; Canada (search for similar items in EconPapers)
JEL-codes: F10 R11 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s11079-021-09629-3

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