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

Author

Listed:
  • Catherine Boulatoff

    (Dalhousie University)

  • Talan B. İşcan

    (Dalhousie University)

  • Yulia Kotlyarova

    (Dalhousie University)

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.

Suggested Citation

  • Catherine Boulatoff & Talan B. İşcan & Yulia Kotlyarova, 2022. "Does Distance Matter for Trade in Services? The Case of Interprovincial Trade in Canada," Open Economies Review, Springer, vol. 33(1), pages 157-185, February.
    • Handle: RePEc:kap:openec:v:33:y:2022:i:1:d:10.1007_s11079-021-09629-3
    DOI: 10.1007/s11079-021-09629-3
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    Cited by:

    1. Ioanna Konstantakopoulou & Mike Tsionas, 2024. "Identifying Export Opportunities: Empirical Evidence from the Southern Euro Area Countries," Open Economies Review, Springer, vol. 35(1), pages 41-70, February.

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    More about this item

    Keywords

    Trade in services; Interregional trade; Distance effect; Gravity model; Canada;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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