The Incidence of Geography on Canada's Services Trade
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.
We are grateful for research support from the Department of Foreign Affairs and International Trade, Canada. Funding came from the Research Fund on North American Borders, Security and Prosperity managed by Industry Canada. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
HOW MUCH DOES GEOGRAPHY DEFLECT SERVICES TRADE? CANADIAN ANSWERS James E. Anderson1,*, Catherine A. Milot2 andYoto V. Yotov3,† International Economic Review Volume 55, Issue 3, pages 791–818, August 2014