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Gravity, Borders, and Regionalism: A Canada–US Sub-National Analysis

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  • Bankole Fred Olayele

Abstract

This article examines the extent to which trade costs influence the magnitude and direction of both east-west and north-south trade in Canada and the United States. With the aid of an alternative framework which pays attention to key estimation issues in the gravity literature, we garner further evidence in support of a decline, over time, in the home bias syndrome. Our results uphold the Linder hypothesis but refute the Heckscher-Ohlin factor endowment proposition. In light of the recently modernized trilateral trade agreement in North America, we conclude with policy lessons on buffering the Canadian economy from asymmetric trade shocks from its southern neighbor.

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  • Bankole Fred Olayele, 2019. "Gravity, Borders, and Regionalism: A Canada–US Sub-National Analysis," The International Trade Journal, Taylor & Francis Journals, vol. 33(5), pages 416-443, September.
    • Handle: RePEc:taf:uitjxx:v:33:y:2019:i:5:p:416-443
    DOI: 10.1080/08853908.2019.1628675
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    Cited by:

    1. Amir Maghssudipour & Annalisa Caloffi & Marco Bellandi & Letizia Donati, 2022. "Language as a regional driver of the trade of place-sensitive products: The case of made-in-Italy goods," Working Papers - Economics wp2022_09.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.

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