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How Much Does Geography Deflect Services Trade?


  • Anderson, James

    (Department of Economics, Boston College)

  • Milot, Catherine

    (Department of Foreign A airs and International Trade Canada)

  • Yotov, Yoto

    (Department of Economics & International Business LeBow College of Business Drexel University)


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 US relative to interprovincial trade to 2.4% of its borderless level. Third party effects acting through multilateral resistance combine with direct effects to reduce foreign relative to interprovincial trade to 0.1% of its frictionless potential. The downward deflection of international services trade is some 7 times smaller than the deflection of international goods trade. Surprisingly, intraprovincial trade in services and goods is equally deflected upward.

Suggested Citation

  • Anderson, James & Milot, Catherine & Yotov, Yoto, 2012. "How Much Does Geography Deflect Services Trade?," School of Economics Working Paper Series 2012-5, LeBow College of Business, Drexel University.
  • Handle: RePEc:ris:drxlwp:2012_005

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    Cited by:

    1. Anderson, James & Larch, Mario & Yotov, Yoto, 2015. "Growth and Trade with Frictions: A Structural Estimation Framework," School of Economics Working Paper Series 2015-2, LeBow College of Business, Drexel University.
    2. Delina E. Agnosteva & James E. Anderson & Yoto V. Yotov, 2014. "Intra-national Trade Costs: Measurement and Aggregation," NBER Working Papers 19872, National Bureau of Economic Research, Inc.
    3. Robin Visser, 2018. "Diplomatic representation, service exports and goods exports," Economics Bulletin, AccessEcon, vol. 38(2), pages 863-869.
    4. Mulabdic, Alen & Rotunno, Lorenzo, 2022. "Trade barriers in government procurement," European Economic Review, Elsevier, vol. 148(C).
    5. Holladay, J. Scott & Mohsin, Mohammed & Pradhan, Shreekar, 2018. "Emissions leakage, environmental policy and trade frictions," Journal of Environmental Economics and Management, Elsevier, vol. 88(C), pages 95-113.
    6. Sigbjørn Sødal, 2017. "A Gravity Approach to Constructing Regional Structures from Interregional Flow Data," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 23(4), pages 361-377, November.
    7. Prehn, Soren & Brümmer, Bernhard & Glauben, Thomas, 2012. "Structural Gravity Estimation & Agriculture," 2012: New Rules of Trade? December 2012, San Diego, California 142765, International Agricultural Trade Research Consortium.
    8. Holladay, J. Scott & Mohsin, Mohammed & Pradhan, Shreekar, 2016. "Emissions Leakage, Environmental Policy and Trade Frictions," Conference papers 332677, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.

    More about this item


    Gravity; home bias; border effects; services trade;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions


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