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National Border Effects: Location, Not Nationality, Matters

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  • Carolyn L. Evans

Abstract

A recent literature documents the downward impact of national borders on trade. This paper probes the relative importance of two potential sources of border effects: (1) pure locational factors, such as transport costs and tariffs; and (2) an inherent disadvantage for a firm selling in a foreign market. I am able to make this decomposition by using data on the local sales of foreign affiliates of US multinational enterprises, on US bilateral exports, and on domestic sales by host-country firms. The "border effect" arises almost entirely from locational factors. If a firm establishes and sells from a subsidiary located in the foreign country, its local sales are about on a par with those of domestic firms in that market. Copyright � 2007 The Author; Journal compilation � 2007 Blackwell Publishing Ltd.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Review of International Economics.

Volume (Year): 15 (2007)
Issue (Month): 2 (05)
Pages: 347-369

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Handle: RePEc:bla:reviec:v:15:y:2007:i:2:p:347-369

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Cited by:
  1. Ferreira-Lopes, Alexandra & Sousa, Cândida & Carvalho, Helena & Crespo, Nuno, 2013. "Trade Protectionism and Intra-industry Trade: A USA - EU Comparison," MPRA Paper 49482, University Library of Munich, Germany.
  2. Dennis Novy, 2013. "Gravity Redux: Measuring International Trade Costs With Panel Data," Economic Inquiry, Western Economic Association International, vol. 51(1), pages 101-121, 01.

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