How Much Does Geography Deflect Services Trade?

James Anderson, Catherine Milot and Yoto Yotov
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Catherine Milot: Department of Foreign A airs and International Trade Canada, Postal: Office of the Chief Economist , Department of Foreign Affairs and International Trade Canada, 125 Sussex Drive, C6-147, Ottawa, Ontario K1A 0G2 Canada

No 2012-5, School of Economics Working Paper Series from LeBow College of Business, Drexel University

Abstract: 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 US relative to interprovincial trade to 2.4% of its borderless level. Third party effects acting through multilateral resistance combine with direct effects to reduce foreign relative to interprovincial trade to 0.1% of its frictionless potential. The downward deflection of international services trade is some 7 times smaller than the deflection of international goods trade. Surprisingly, intraprovincial trade in services and goods is equally deflected upward.

Keywords: Gravity; home bias; border effects; services trade (search for similar items in EconPapers)
JEL-codes: F13 F14 F16 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2012-07-06
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Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:ris:drxlwp:2012_005

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