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National Borders, Trade and Migration

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  • John F. Helliwell

Abstract

The paper first extends and reconciles recent estimates of the strikingly large effect of national borders on trade patterns. Estimates comparing trade among Canadian provinces with that between Canadian provinces and U.S. states show interprovincial trade in 1988-90 to have been more than twenty times as dense as that between provinces and states, with some evidence of a downward trend since, due to the post-FTA growth in trade between Canada and the United States. Using approximate data for the volumes and distances of internal trade in OECD countries, the 1988-92 border effect for unrelated OECD countries is estimated to exceed 12. Both types of data confirm substantial border effects, even after accounting for common borders and language, with the directly-measured data for interprovincial and province-state trade producing higher estimates." Initial estimates from a census-based gravity model of interprovincial and international migration show a much higher border effect for migration, with interprovincial migration among the Anglophone provinces almost 100 times as dense as that from U.S. states to Canadian provinces. Effects of migration on subsequent trade patterns are found for international but not for interprovincial trade, suggesting the existence of nationally-shared networks the large national border effects for trade flows.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 6027.

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Date of creation: Mar 1999
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Handle: RePEc:nbr:nberwo:6027

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  1. James E. Rauch, 1996. "Networks versus Markets in International Trade," NBER Working Papers 5617, National Bureau of Economic Research, Inc.
  2. McCallum, John, 1995. "National Borders Matter: Canada-U.S. Regional Trade Patterns," American Economic Review, American Economic Association, vol. 85(3), pages 615-23, June.
  3. John F. Helliwell, 1996. "Do National Borders Matter for Quebec's Trade?," NBER Working Papers 5215, National Bureau of Economic Research, Inc.
  4. Alan M. Taylor, 1995. "Growth and Convergence in the Asia-Pacific Region: On the Role of Openness, Trade and Migration," NBER Working Papers 5276, National Bureau of Economic Research, Inc.
  5. Helpman, Elhanan, 1984. "Increasing returns, imperfect markets, and trade theory," Handbook of International Economics, in: R. W. Jones & P. B. Kenen (ed.), Handbook of International Economics, edition 1, volume 1, chapter 7, pages 325-365 Elsevier.
  6. Keith Head & John Ries, 1998. "Immigration and Trade Creation: Econometric Evidence from Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 31(1), pages 47-62, February.
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