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Is Our World Going to Get a Whole Lot Smaller?


  • Byron Gangnes
  • Alyson C. Ma
  • Ari Van Assche


The surge of oil prices in recent years has led to speculation that rising transportation costs could end the period of dramatic world trade growth in the words of Rubin (2009), Your world is going to get a whole lot smaller. Using data from China's Customs Statistics, we examine the impact of oil prices on trade's sensitivity to distance. We find that higher oil prices increase trade's elasticity to distance, but that the economic effect is small. We also find that the effect is more pronounced for trade within global production networks, and less large for goods shipped by air.

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  • Byron Gangnes & Alyson C. Ma & Ari Van Assche, 2011. "Is Our World Going to Get a Whole Lot Smaller?," CIRANO Working Papers 2011s-31, CIRANO.
  • Handle: RePEc:cir:cirwor:2011s-31

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    Cited by:

    1. Sacks, Audrey & Rahman, Erman & Turkewitz, Joel & Buehler, Michael & Saleh, Imad, 2014. "The dynamics of centralized procurement reform in a decentralized state : evidence and lessons from Indonesia," Policy Research Working Paper Series 6977, The World Bank.

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    oil prices; distance; trade; vertical specialization; mode of transport; China;

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