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How Much Does Geography Deflect Services Trade? Canadian Answers

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  • James E. Anderson
  • Catherine A. Milot
  • Yoto V. Yotov

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 United States relative to interprovincial trade to 2.4% of its borderless level. Incorporating multilateral resistance reduces foreign trade relative to interprovincial to 0.1% of its frictionless potential. Geography reduces services trade some seven times more than goods trade overall. Surprisingly, intraprovincial (local) trade in services and goods is equally deflected upward, implying that the border increases interprovincial trade much more in services than goods.

Suggested Citation

  • James E. Anderson & Catherine A. Milot & Yoto V. Yotov, 2014. "How Much Does Geography Deflect Services Trade? Canadian Answers," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 55(3), pages 791-818, August.
    • Handle: RePEc:wly:iecrev:v:55:y:2014:i:3:p:791-818
    DOI: 10.1111/iere.12071
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    References listed on IDEAS

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