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Interprovincial Barriers to Internal Trade in Goods, Services and Flows of Capital: Policy, Knowledge Gaps and Research Issues


  • Macmillan, Kathleen
  • Grady, Patrick


This paper summarizes the state of knowledge on internal barriers to trade in goods, services and flows of capital, examines their cost to the economy, and presents some options for addressing the important barriers that remain. A companion paper examines barriers to labour mobility in Canada (Grady and Macmillan, 2007). The paper finds that there is no single overriding research methodology that is most appealing, and suggests employing a methodology most suitable for the use to which the estimates would be put. Researchers could measure the cost of barriers with a case study approach because of its usefulness in focussing attention on specific barriers deserving of attention; update the 1983 and 1995 work of John Whalley, and others; or use computable general equilibrium models to test empirically the gains from increased trade. The study suggests that whether significant progress in dismantling barriers is achieved might well depend on factors such as whether parties abandon or stay with the current Agreement to Internal Trade (AIT) negotiating model. Good progress could also be made with the creation of bilateral and plurilateral agreements such as the Alberta-B.C. Trade, Investment and Labour Mobility Agreement and the recent Interim Agreement on agriculture as it allows like-minded parties to side-step the AIT’s requirement for unanimous consensus. The study also concludes that economic events, such as labour shortages, may well drive the internal trade agenda in the next decade.

Suggested Citation

  • Macmillan, Kathleen & Grady, Patrick, 2007. "Interprovincial Barriers to Internal Trade in Goods, Services and Flows of Capital: Policy, Knowledge Gaps and Research Issues," MPRA Paper 8709, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:8709

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    References listed on IDEAS

    1. Engel, Charles & Rogers, John H, 1996. "How Wide Is the Border?," American Economic Review, American Economic Association, vol. 86(5), pages 1112-1125, December.
    2. Grady, Patrick & Macmillan, Kathleen, 2007. "Interprovincial Barriers to Labour Mobility in Canada:Policy, Knowledge Gaps and Research Issues," MPRA Paper 2988, University Library of Munich, Germany.
    3. John F. Helliwell, 1996. "Do National Borders Matter for Quebec's Trade?," Canadian Journal of Economics, Canadian Economics Association, vol. 29(3), pages 507-522, August.
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    More about this item


    trade; trade barriers; internal trade;

    JEL classification:

    • N72 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - U.S.; Canada: 1913-
    • F15 - International Economics - - Trade - - - Economic Integration
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade


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