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The Incidence of Geography on Canada's Services Trade

Author

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

Abstract

We estimate geographic barriers to export trade in nine service categories for Canada's provinces from 1997 to 2007 using the structural gravity model. Constructed Home, Domestic and Foreign Bias indexes (the last two new) capture the direct plus indirect effect of services trade costs on intra-provincial, inter-provincial and international trade relative to their frictionless benchmarks. Barriers to services international trade are huge relative to inter-provincial trade and large relative to goods international trade. A novel test confirms the fit of structural gravity with services trade data.

Suggested Citation

  • James E. Anderson & Catherine A. Milot & Yoto V. Yotov, 2011. "The Incidence of Geography on Canada's Services Trade," NBER Working Papers 17630, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:17630
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    References listed on IDEAS

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    1. Anderson, James E. & Yotov, Yoto V., 2016. "Terms of trade and global efficiency effects of free trade agreements, 1990–2002," Journal of International Economics, Elsevier, vol. 99(C), pages 279-298.
    2. James E. Anderson & Yoto V. Yotov, 2010. "The Changing Incidence of Geography," American Economic Review, American Economic Association, vol. 100(5), pages 2157-2186, December.
    3. Richard Baldwin & Daria Taglioni, 2006. "Gravity for Dummies and Dummies for Gravity Equations," NBER Working Papers 12516, National Bureau of Economic Research, Inc.
    4. Mayer, Thierry & Zignago, Soledad, 2006. "Notes on CEPII’s distances measures," MPRA Paper 26469, University Library of Munich, Germany.
    5. Keith Head & Thierry Mayer, 2000. "Non-Europe: The magnitude and causes of market fragmentation in the EU," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 136(2), pages 284-314, June.
    6. James E. Anderson & Yoto V. Yotov, 2010. "Specialization: Pro- and Anti-globalizing, 1990-2002," NBER Working Papers 16301, National Bureau of Economic Research, Inc.
    7. Elhanan Helpman & Marc Melitz & Yona Rubinstein, 2008. "Estimating Trade Flows: Trading Partners and Trading Volumes," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 123(2), pages 441-487.
    8. James E. Anderson, 2011. "The Gravity Model," Annual Review of Economics, Annual Reviews, vol. 3(1), pages 133-160, September.
    9. James E. Anderson & Eric van Wincoop, 2003. "Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, American Economic Association, vol. 93(1), pages 170-192, March.
    10. W. Mark Brown & William P. Anderson, 2002. "articles: Spatial markets and the potential for economic integration between Canadian and U.S. regions," Papers in Regional Science, Springer;Regional Science Association International, vol. 81(1), pages 99-120.
    11. McCallum, John, 1995. "National Borders Matter: Canada-U.S. Regional Trade Patterns," American Economic Review, American Economic Association, vol. 85(3), pages 615-623, June.
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    Cited by:

    1. Gervais, Antoine & Jensen, J. Bradford, 2019. "The tradability of services: Geographic concentration and trade costs," Journal of International Economics, Elsevier, vol. 118(C), pages 331-350.
    2. Minondo, Asier, 2012. "Are trade costs higher for services than for manufactures? Evidence from firm-level data," MPRA Paper 36185, University Library of Munich, Germany.
    3. James E. Anderson & Mykyta Vesselovsky & Yoto V. Yotov, 2013. "Gravity, Scale and Exchange Rates," NBER Working Papers 18807, National Bureau of Economic Research, Inc.
    4. Erik der Marel & Sébastien Miroudot, 2014. "The economics and political economy of going beyond the GATS," The Review of International Organizations, Springer, vol. 9(2), pages 205-239, June.
    5. Zhiqi Chen & Horatiu A. Rus & Anindya Sen, 2016. "Border Effects Before and After 9/11: Panel Data Evidence Across Industries," The World Economy, Wiley Blackwell, vol. 39(10), pages 1456-1481, October.
    6. Shingal, Anirudh, 2013. "Revisiting the trade effects of services agreements," MPRA Paper 51243, University Library of Munich, Germany.
    7. Egger, Peter & Larch, Mario & Staub, Kevin E, 2012. "Trade Preferences and Bilateral Trade in Goods and Services: A Structural Approach," CEPR Discussion Papers 9051, C.E.P.R. Discussion Papers.
    8. Scott L. Baier & Narendra R. Regmi, 2023. "Using Machine Learning to Capture Heterogeneity in Trade Agreements," Open Economies Review, Springer, vol. 34(4), pages 863-894, September.
    9. 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.
    10. Anderson, James & Vesselovsky, Mykyta & Yotov, Yoto, 2014. "Gravity with Scale Economies," School of Economics Working Paper Series 2014-4, LeBow College of Business, Drexel University.

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    JEL classification:

    • F1 - International Economics - - Trade

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