Distance, time, and specialization

Carolyn Evans and James Harrigan

No 766, International Finance Discussion Papers from Board of Governors of the Federal Reserve System (U.S.)

Abstract: Time is money, and distance matters. We model the interaction of these truisms, and show the implications for global specialization and trade: products where timely delivery is important will be produced near the source of final demand, where wages will be higher as a result. In the model, timely delivery is important because it allows retailers to respond to fluctuating final demand without holding costly inventories, and timely delivery is only possible from nearby locations. Using a unique dataset that allows us to measure the retail demand for timely delivery, we show that the sources of US apparel imports have shifted in the way predicted by the model, with products where timeliness matters increasingly imported from nearby countries.

Keywords: International trade; Transportation - Fares (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (35)

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Related works:
Working Paper: Distance, Time and Specialization (2004)
Working Paper: Distance, Time, and Specialization (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgif:766

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